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Tax GDP ratio to reach 12-14 per cent: FM
Mon, 14 Mar 2011 13:17:43 GMT
NEW DELHI: Finance Minister Pranab Mukherjee today made a case for raising the Tax GDP ratio to a "reasonable level" of 12-14 per cent to enhance the government's capability to fund social sector scheme.

"I do believe that Tax GDP ratio, which has come down to 10 per cent plus, must reach 12 per cent. So that the Tax GDP ratio is at reasonable level," Mukherjee said in his reply to General Budget 2011-12 in Rajya Sabha.

It should be 12-14 per cent and the share of direct taxes, which is non-inflationary, should be more in the kitty, he said.

Share of direct taxes in overall tax revenue has been growing, he said, adding, it was 60 per cent during 2009-10.

For 2010-11, Revised Estimate indicates direct tax contribution to revenue basket at 57 per cent while Budget Estimate of 2011-12 also pegs it at the same level, he said.

On economic growth, Mukherjee said, GDP growth was 8 per cent in 2009-10 and 8.6 per cent as per the latest report of CSO for 2010-11.

"And therefore based on these figures, I have projected a growth of 9 per cent for 2011-12," he said.

Mukherjee also said that the government will follow fiscal consolidation despite volatility in crude oil price and commodity prices.

"I do feel, it is possible for us to maintain fiscal would be possible to reach fiscal deficit target of 4.6 per cent (2011-12)," he said.

In the Budget speech last month, the Finance Minister had said, "For 2011-12, I have kept it at 4.6 per cent of GDP, which improves upon my own target for 2011-12 indicated in the fiscal road map presented in the last Budget."

"In the Medium Term Fiscal Policy Statement being presented to the House today, the rolling targets for fiscal deficit are placed at 4.1 per cent for 2012-13, and 3.5 per cent for 2013-14," he added.

Terming inflation as "one of the most important and serious concerns" he said that by March-end it should come down to seven per cent.
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