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With the cries for bold reforms getting louder, the Finance Minister, Mr Pranab Mukherjee, said that there is no headroom for running a proactive fiscal policy.
He also hoped that the growth momentum will recover.
Addressing the annual conference of the Central Board of Excise and Custom (CBEC), Mr Mukherjee said, “The second round of global uncertainty and the slowdown has come rather quickly on the heels of the previous one, with practically no headroom for running a proactive fiscal policy.”
However, he said that there are some positives for the economy.
“The interest rate cycle has been reversed; mining sector growth has turned around, progress has been made on fuel linkage for coal-based power projects; there is a turnaround in the quarterly investment growth rate, which had been negative in the preceding quarters of 2011-12; a normal south-west monsoon has been predicted for 2012-13 and there has been a rapid decline in international oil prices in recent weeks,” he said.
He also said that there are no major adverse results in corporate performance in the last quarter of 2011-12. All these factors should help in the recovery of growth momentum, he said.
Negative list
He also announced that the ‘Negative List' approach for taxation of services will come into effect from July 1. Under the new approach, all services except those in the ‘Negative List' or otherwise exempted, would come into the tax net.
The new comprehensive approach to taxation of services is preparatory to the introduction of GST.
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