New Delhi: Cut in excise and customs duties will encourage more investment and help the economy to grow faster, Finance Minister P Chidambaram said on Tuesday.
"Tax rates are being fine-tuned to attract more investment," he said at a press conference after presenting the Union Budget for 2006-07.
Chidambaram said that this is a powerful signal to investors on how "we are pursuing a fiscal policy to ensure that there is monetary stability."
Stressing that investment leads to growth, Chidambaram added, it is "required to promote investments both public and private, which is why plan expenditure has been substantially enhanced."
The policies the Government has formulated and the policies in the making will crowd in more investment from both domestic and foreign investors, he said.
Giving an example, he said how following the announcement of cut on excise duty on small cars, two small car manufacturers have already slashed prices.
The cut on excise duty on cars will lead to addition of new capacity and new investments will be made helping the auto industry to grow faster and face competition.
Chidambaram asserted that this trend would get replicated in other areas like food processing, metal and leather also.
On the huge outlays for Sarva Siksha Abhiyan, mid-day meal, National Rural Health Mission and National Employment Guarantee Scheme, Chidambaram said, "This is spending money on the people who deserve. We do not apologise for the promises we have made."
He admitted that pricing of credit to farmers remains a contentious issue, but said the UPA Government has recommended credit at reasonable interest rates.
"We have to rev up farm growth to over 4 per cent and ensure that price of credit has to be appropriate. We have decided to give crop loans (short term loans) at 7 per cent interest rate," Chidambarm said.
Rs 1,700 crore has been made available for providing crop loans in this fiscal year.
The government is optimistic of achieving the Rs 1,41,500 crore credit disbursement target fixed for agriculture in 2005-06, he added.
Chidambaram said the big idea behind the Budget was to "raise growth rate and help agriculture."
He dispelled the suggestion that there was a proposal to tax the rich rural farmers.
Meanwhile, Chidambaram also said that the Budget has not touched the issue of high global oil price.
"The Budget does not address the global oil price as there is no control over the crude oil price," he said.
The Finance Minister supported the idea of theme-based townships and said that the Government has no problems in building a township on the basis of a particular industrial sector. "Japanese investors could meet me in this regard," he said.
On inflation, he said every effort would be made to keep it below five per cent.
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