| Jaswant Singh addressing a national conference on the Union Budget 2003-2004 organised by the Federation of Indian Chambers of Commerce and Industry (Ficci) in New Delhi on Saturday. (AFP)
New Delhi, March 1: Finance minister Jaswant Singh has said he will consider abolishing the long-term capital gains tax if the war-like situation in Iraq eases and the drought condition in the country improves.
“There are constraints in managing the economy because of the uniquely combined challenge of an unprecedented drought for several decades, war-like situation in the Gulf impacting the price of hydrocarbons, a recalcitrant neighbour which continues to trouble and terrorism that continues to conflict,” Singh said.
“If the situation improves, I can re-address it. But at this moment I cannot give you the assurance that you seek,” Singh told industrialists at a conference organised by Ficci to discuss the Union Budget for 2003-04.
He added that if the long-term capital tax was lifted, the holdings that have been in the possession of investors for the last four to five years would be dumped on to the Indian capital market and that will depress the Indian markets further.
“Under such circumstances, India’s capital market is not independent of global capital markets. What happens in global markets directly impacts the Indian capital market,” Singh said.
Speaking on the issue of debt management, the finance minister said, “For the first time, the finance ministry paid roughly $ 3 billion ahead of schedule towards economic debt.”
He added, “When we talk of higher yield securities of banks and they being able to encash them voluntarily in an open and transparent pricing mechanism, then it will imply the first tranche itself turning over roughly to approximately Rs 40,000 crore of such securities of bank NPAs”.
“Combining this with the state debt by year 2004-05, high cost debt of the states amounting to Rs 83,000 crore would have been swapped. Therefore, between this and next year, a total of about Rs 1,20,000 crore is going to turn over and change,” Singh said.
Stating that the budgetary exercise is not a mere economic exercise, Singh said, “It is important to understand that the budget has to have a foundation of thought and keeping India’s continental size in mind, a total understanding of inputs of the political management of the economy is critical. It is a question of converting the liability of want into the assets of ability.”