Post by Sapphire Capital on Jul 14, 2008 3:17:34 GMT 4
NEW DELHI, July 13: While emphasising the need to check demand of ‘affluent sections’ to curb price rise, Centre today indicated that the government was not considering further reduction in taxes on various items to tackle inflation.
“The fiscal situation is under pressure. Obviously, you have to moderate demand of the affluent sections. That is something, which we have to consider in due course of time,” said the Union finance minister Mr P Chidambaram in an interview to a TV channel.
“Fiscal steps like cutting taxes help to some extent, but you cannot cut taxes indefinitely, because after a certain point, there is nothing to cut,” the minister said. The government was relying on momentary steps in the current situation to moderate demand, the minister said while referring to the high inflation which has touched 11.89 for the week ended 28 June.
Finance ministry has already abolished or reduced taxes on various food items, cement, cotton, oil and other commodities to contain inflation.
“The best instrument to reduce aggregate demand is monetary policy. That is why the RBI, the monetary authority, is the first line of defence,” he said. As regards decline in GDP growth prospects in 2008-09, the minister said it was all because of the turbulence in the international market. “Had there been no turbulence in the international market, it could have been nine per cent. Still the growth during the current fiscal would be above eight per cent,” the minister claimed.
“The fiscal situation is under pressure. Obviously, you have to moderate demand of the affluent sections. That is something, which we have to consider in due course of time,” said the Union finance minister Mr P Chidambaram in an interview to a TV channel.
“Fiscal steps like cutting taxes help to some extent, but you cannot cut taxes indefinitely, because after a certain point, there is nothing to cut,” the minister said. The government was relying on momentary steps in the current situation to moderate demand, the minister said while referring to the high inflation which has touched 11.89 for the week ended 28 June.
Finance ministry has already abolished or reduced taxes on various food items, cement, cotton, oil and other commodities to contain inflation.
“The best instrument to reduce aggregate demand is monetary policy. That is why the RBI, the monetary authority, is the first line of defence,” he said. As regards decline in GDP growth prospects in 2008-09, the minister said it was all because of the turbulence in the international market. “Had there been no turbulence in the international market, it could have been nine per cent. Still the growth during the current fiscal would be above eight per cent,” the minister claimed.