Mr Chairman sir, first of all, I would like to express my gratitude to all the honourable members who have participated in the debate on the Finance Bill and made their observations. Many valuable suggestions have emerged from their observations.

The debate was initiated by honourable Yashwant Sinha who has the distinction of presenting a very large number of Budgets as finance minister of the Union government.
Normally, there is a saying in the finance ministry. The rate of mortality in parliamentary politics is very high. But particularly in the ministry of finance, the rate of mortality is much more high. Because of that, you might have noticed a very interesting factor that from 1947 to 1984, no finance minister mentioned his name in the Budget, including me. For the first time, the name of the finance minister was printed in the Budget Speech from 1985 when Shri Vishwanath Pratap Singh succeeded. In that context, Shri Yashwant Sinha is one of the unique exceptions like Shri C.D. Deshmukh or Dr Manmohan Singh or my colleague, Shri P. Chidambaram who have the distinction of presenting full Budgets for five years consecutively and, even before that, one Interim Budget.

He has, in his long observations, made many important points. But I am encouraged by particularly the peroration part of his speech when he said that Indian growth story cannot come to an end and he pointed out that the Indian economy should revive and must revive.

I also appreciate when he said that when things get tough, only the tough gets going. I would only like to add that in the days of coalition era, the tough can get going and the tough should get going together. We shall have to go together to improve the situation, to improve the financial condition and bring back the economy on its track and explore the full potential, which it has.

It is because the Indian economy has its resilience. I must say that despite divergent views and despite differences in our approach — in a multi-party democratic system these things are bound to happen — when the real crisis comes, when it knocks at the doors, we have the capacity to respond to that unitedly. Please remember, the major economic reforms about which we talk, as a process of economic liberalisation, would not have been possible, but for the support of all stakeholders, including the Opposition parties. At that point of time also, the BJP was the principal Opposition party. Of course, there was no coalition government under Shri P.V. Narasimha Rao. But the ruling government coalition only had 226 members in the Lok Sabha. Today’s Prime Minister and the then finance minister could not bring major changes with regard to industrial policy, investment policy, foreign trade policy, opening the economy, participation in the WTO. Later, it was done. It would not have been possible, but for the cooperation of all the stakeholders, including the political parties.

From 1989 to 1999, in this period of 10 years, in normal course, there should have been only two general elections, one in 1989 and the other in 1994. But actually we had five general elections, in 1989, 1991, 1996, 1998 and in 1999. We did it. We made and unmade the governments. Nobody else was the player. We the political parties, representing
different sections, were the players.

I had the privilege of discussing it with honourable Advaniji. I asked him: Could not we think of something that could provide stability in the administrative system and in the parliamentary system? We did not bring any law. But there was an understanding that making and unmaking governments, thrusting general elections on the people, where 600 to 700 million voters have to participate to elect 543 members to the Lok Sabha, is a luxury and that this political instability is causing harm to the country. Between 1999 and 2004, only one Motion of No-Confidence was moved because we recognised it. In the entire period of UPA-1 and UPA-2 — up to now, I do not know what will happen in the next Session or even in the later part of this Session — no formal No-Confidence Motion has been moved. Why? It is because we do not want to play with making and unmaking of governments. This understanding has come from experiences. We had not to make any law. We had not to bring any legal institutional framework. The short point which I am trying to drive at is that if the political parties decide, as and when the situation demands, they can respond to the situation unitedly.

Please do not mind and come rushing to the conclusion that more often we refer to international situation. We ought to refer to international situations. We are not living in isolation. What happens in oil-producing countries affects me, affects my farmers, and it affects my transport operators. I cannot remain insulated. If there is a Middle-Eastern crisis, if there is a West Asian crisis, if my potassium fertiliser price increases substantially, then availability becomes an issue. It concerns me.

Today the entire world is inter-dependent. Nobody can say that they can insulate themselves from what is happening in other parts of the country. Therefore, this aspect is to be kept in view. There is no denying the fact that 'yes' GDP has come down. We were continuously having for a very long period of time high GDP growth, low fiscal deficit, and moderate rate of inflation. But situations do not remain the same. Between 2008 and 2011, two major international crisis had taken place. Shri Yashwant Sinha has referred to and rightly so to the reports of the International Monetary Fund.

Yes, I know. But in the same report, the honourable member would see and if he just takes three other reports of the International Monetary Fund in the same year, how many times they revised or re-revised the growth projection of not merely India, but also of major economies like China, the US and whole of Europe because the situation is changing constantly. Only change is the constant factor. What has happened yesterday or day before yesterday or on Sunday, it is just not confined to the geographical territory of France or that of Greece because all the austerity measures to bring fiscal discipline in Greece or in Europe, in the firewall which has been built; we have also a small contribution. In the firewall built by the European countries themselves, by the European Bank, and in IMF’s $600 billion firewall, India also has a contribution. Emerging economies’ contribution is in question because of the package which has been prescribed to bring down fiscal deficit, and to reduce the high sovereign debt.

If a country is to live with 126 per cent of the debt of its GDP, it cannot live for a very long period of time without declaring itself insolvent. Therefore, these issues are staring at us. When the oil prices are mounting every day, it is just not a phenomenon concerned only with the oil producing countries because we are the oil consuming country and India is one of the largest consumers. Last year we imported about 170 million tonnes of crude. Our domestic production is 33 million tonnes or 34 million tonnes. Of course, the entire amount we do not consume. As we have built up the refining capacity, the part of it we bring it for export and re-export. But our own consumption is more than 100 million tonnes and our production is just 33 million tonnes or 34 million tonnes. Fortunately, in Rajasthan, we have found out oil, but it is not going to solve my problem in the next year or year after that and it will take some time. Therefore, today if I am to pay and here I had some preliminary discussions with some of my colleagues; it is not my proposal, but I am asking through my observations and appealing to all stakeholders, political parties represented in Parliament, in the state Assemblies, state governments that we have to address this issue. What should we do? Under-recoveries of oil marketing companies would be1,39,000 crore.

Right now, the subsidies which we are providing or the under-recoveries which are there, whatever term you may use, in the case of diesel, it is14.50 per litre; in the case of kerosene, it is31.88 per litre and in the case of LPG, it is412 per cylinder of 14 kg. That is the subsidy which we are providing. Is it possible to maintain this level of subsidy? On the other hand, we know the economists, essayists may write down in the newspaper columns saying “increase the price”. What would be the effect on the consumers? It would also have its impact on the already volatile inflationary situation. So the issues are to be addressed. Therefore, I am suggesting to all of us, including ourselves, to consider this: Can we find out a mechanism through which we can do it?

There is a tax component. For instance, in Delhi, if petrol is costing at the refinery gate 36 per litre, with the state taxes and the Central taxes, it comes to almost 73 per litre. Can we do something collectively, the states and the Centre together so that the oil-marketing companies are not reduced to a situation like this? My impression is that these are all public sector companies. Please remember that if the private sector companies find out that they cannot sell the oil at what price they are buying from abroad, they will stop buying it but the public sector companies cannot do because we are asking them to import so that the availability is there. But if they are broken, who will bring it? Which agencies will bring it?

Today, we are talking of high price. For us, tomorrow, we may have to think of availability at all. If the prices go up to $150 per barrel — it is not merely my imaginary fear — what will be the effect? Today, please remember for two consecutive years, the demand in Europe is low. The demand in the major economy is low because there is no growth.

Once the demand in these major economies picks up after the economic recovery, oil prices will go up. It will go up. So this issue has to be thought of. I have no readymade solution to it. What I am suggesting is that if we can work out a mechanism through which we can do it, it will be good. We need not resort to declaring it as declared goods by amending the necessary law.

But if the political wisdom of the country as a whole collectively can decide that every one of us will have to have a hair-cut, perhaps, we can find out a solution. Partly, it will be passed on to the consumers, partly, it will be absorbed by the state governments and partly, it will be absorbed by the Union government. But please do not expect us that the Centre would be in a position to compensate it. It is not.

Shri Yashwant Sinha, the other day, was correctly telling me that the state taxes are taxes on taxes because these are ad valorem on VAT. Therefore, when I am having an import duty or excise duty, their taxes are ad valorem. Whatever I earn — Shri Yashwant Sinha was saying that41,000 crore is a massive resource mobilisation — I do agree that it is a massive mobilisation by increasing excise duty from 10 per cent to 12 per cent. But please remember that it was 14 per cent. While providing this stimulus package in 2008, I brought it down from 14 per cent to 10 per cent.

I have not gone back from 10 per cent 14 per cent; I have rested it at 12 per cent. There too, I am not appropriated the entire41,000 crore — almost one-third — 32 per cent of it is going to the state governments. I am receiving criticism; receiving galis; beneficiaries are others. Therefore, in my Budget, when I say, that I shall have to be kind, I shall have to be cruel to be kind — I am cruel to myself, kind to others because attracting criticism, I have also provided the state governments collectively to receive 32 per cent of my additional resource mobilisation amount.

We are talking of fiscal consolidation. And I do believe that without fiscal consolidation, the economy cannot be brought back to the path of higher GDP growth. Economic distortions cannot be put in place and for that how could we do it? We shall have to mobilise resources. Please remember, we have made all experiments, I am too an old hat, I saw the higher tax regime in the concept of progressive tax regime, the rich should pay more. We had at one point of time a tax system — for every additional100 income, one had to pay taxes of105. Nobody did pay that tax. The situation ultimately resulted in massive tax evasion because there is a law of elasticity. If you try to expand beyond the point, it breaks; it does not go beyond that point because it reached the elasticity limit. After that, we have changed the system. Now, the revenue bonds are there. Figures and numbers are available to everybody. They can check up. What was the tax

GDP ratio when we have the highest tax rate? When it is 30 per cent, what is the tax GDP ratio and what is the tax rate? Therefore, my respectful submission would that fiscal consolidation is to be achieved. When I have suggested two per cent of GDP should be the limit, it is not the fancy figure coming out of my piped dreams — though I have given up smoking pipe for a long time — because it is 1.9 per cent which is already available now. Therefore, if we want, we can keep it there.

I agree with Yashwant Sinhaji when he says it is not an easy task. Yes, it is a very difficult task. It is a stupendously difficult task. But always I shall have to keep in mind that current account deficit of four per cent, fiscal deficit of 5.9 per cent — can the economy bear it? Should we then come back to the path of restoration, recovery, collection and for that, certain strong measures are required. It becomes easier, to take the strong measures. If we can do that, yes, we can say, and I don’t say it is not fully justified. Yes, some of the Indian investors also feel shy of making investments in India.

And in the price rise debate, when you referred to the India Today’s six photographs, what did I say? I do believe that if we can see just the three fiscal legislations passed, two major tax reforms passed, the entire atmosphere will be changed.

But with 206 members of the Congress Party, I cannot get those legislations passed, I cannot have the Constitution Amendment passed where two-third majority of both the Houses and ratification by 50 per cent states are required, I cannot have that. I am not indulging in any blame sharing or blaming anybody. I am simply sharing certain facts.
Sir, somebody has expressed an apprehension that we may go back to a situation like it was prevailing in 1991. Why? It is because the current account deficit is high and fiscal deficit is also high. Most respectfully I would submit to Yashwant Sinhaji and others that these two situations are not comparable. The level of foreign exchange reserve is much higher today compared to 1991.

The foreign exchange reserve as a percentage of GDP was 1.9 per cent in 1991, today it is 16.9 per cent in 2011-12.

Harin Pathak (Ahmedabad East): What about debt?

Pranab Mukherjee: I am giving all the figures. That is why I have picked up this piece of paper. Don’t worry Harin, to satisfy you, — I know your appetite for figures — I am giving all the figures.

The import cover provided by foreign exchange reserves was for two-and-a-half months in 1991. Though it was 14 months when my colleague Shri Chidambaram was presiding over this ministry, it has come down to half of that, but it is still at the level of 7.3 months now.

The external debt was 28.7 per cent of GDP in 1991 and it was 38.7 per cent of GDP in 1991-92 and for the period from April to December, 2011, — January, February and March, 2012 figures are yet to be compiled — it is 20 per cent of GDP. Therefore, it has come down from 38.7 per cent of GDP to 20 per cent of GDP.

Yashwant Sinhaji raised an issue and I agree with him that we should be extremely careful about short-term borrowing. Short-term external debt as a percentage of reserve was 146.5 per cent in 1991 and this has declined to 26.3 per cent.

The short-term debt flow financed was about 11 per cent of the current account deficit in 2011-12 and 23.9 per cent in 2010-11. So, there also we have made substantial improvement.

Sir, I do agree that the current account deficit is a matter of concern. If there is a crisis in food, it does not mean that we shall have to start eating lizards. The situation is not that difficult today. Of course, it is a difficult situation, but we can overcome that situation as we have overcome in the past.

It has been raised that fiscal indiscipline has started from 2008-09 because of stimulus package. I do not deny that fact. Yes, we injected1,86,000 crore as fiscal expansion in the form of stimulus package. But Mr Chidambaram is not responsible for that because it was done in the months of December, January and last batch was done in February in my Interim Budget and he left the ministry of finance on 1st or 2nd of December in 2008.

I am not apologetic. Why I am not apologetic? It is because we could correct the situation. If I would not have provided the way GDP was decelerating, we would have ended the year with less than five per cent and we ended the year with 6.6 per cent. Thereafter we had a bounce back; in 2009-10, we had 8.4 per cent and in 2010-11 we had 8.4 per cent.
Again, another crisis came, that is, Eurozone crisis. I cannot ignore the fact that more than 36 per cent of my export even today is destined towards Europe and if there is no demand, whatever efforts you may make to diversify the export destination, it will be less. But we have done this and that is why the export has gone to more than 300 billion dollars.

But at the same time, I shall have to recognise that export destination change is not easy. It takes time and particularly in a regime where we are extra sensitive. If any commodity price increases, the first target is the export. We resort to switch-off, switch-on policy, like, in many countries. It is not unusual that if a commodity is in short supply, they maintain their export commitment to retain their presence in external market and import the same commodity. It is not earning. But, unfortunately, we have not been able to develop that system. As a result, we not only lose the country destination but also it becomes difficult to build-up the market. Therefore, we shall have to have a steady export-import policy where a component, maybe the same commodities are exported, maybe imported so that the presence in the external market and the reliability on the Indian market as supplier remains intact.

Why did the stock market volatility take place? One of the major reasons was because there was outflow of the FII. For several years these FIIs are providing necessary support to fund the current account deficit. So it has to have its adverse impact on the economy and it had. But we are trying to restore it.

Confidence can be brought back, if we can decisively act, Parliament can decisively assert that yes necessary legislation will be made. We have come out of those debates and we cannot go on having the rigmarole of that debate. After 1991-92, there have been two non-Congress governments, one government led by Shri Devegowda and Shri Gujral from 1996 to 1998, and thereafter the NDA. Thereafter the UPA government came. The UPA is not a Congress government alone.

There are other partners. Many of them are traditional opponents to Congress. I would not say enemy; nobody is enemy in politics; there may be opponents. Therefore, it has been recognised that some of the basic changes which we have brought in 1991, 1992 are essential. That provides the strength of our basic fundamentals, our economic strength. We shall have to depend on that basic strength. I am quite confident that we will be able to do that.

Now, one issue is being debated — states have expressed concern and Yashwant Sinhaji has also pointed it out — that is Central Sales Tax (CST). If I go back to the history of the Central Sales Tax, of the Sixth Constitutional Amendment in 1956, passage of the CST in 1957 and major change in 1975, it will take a long time. But the short point which I am trying to drive at is this. When Mr Chidambaram was the finance minister, it was recognised by the Empowered Committee of the State Finance Ministers, which honourable Yashwant Sinhaji in his foresight thought it necessary and he has provided a permanent institutional mechanism through which we can interact with the states easily. This is a good mechanism.

He has his understanding. CST is not like VAT. VAT was one set of tax replaced by another set of tax. The idea was that Central Sales Tax is to be phased out and it will have to be submerged in GST. Therefore, there is a correlation. During the intervening period, when the CST rate will be brought down from four per cent to three per cent, from three per cent to two per cent, from two per cent to one per cent, from one per cent to zero, that is in April 2010, then GST will be in place and it will be compensated. It was not merely through the cash compensation. There were a number of non-monetary measures to be taken, and we have taken those non-monetary measures so far as the CST is concerned.

What was suggested was that the states to party make up their loss will levy taxes on tobacco, sugar and textiles. Second was abolition of default for the purchase by government departments. It has been done. Another was restructuring the VAT rates by increasing it to four to five per cent with effect from 1.4.2008 and further to six per cent with effect from 1.4.2009. Therefore, it is not correct to say that. If some state governments take the position that it is my inherent right to decide what would be the VAT rate, you do not take into account while computing the loss of the states. This was the agreement, this was the arrangement agreed by the State Finance Ministers’ Empowered Committee and the union finance minister. Thereafter the crisis of 2008 came.

I took over the finance ministry. I had discussions with the chairman of the Empowered Committee of the State Finance Ministers and it was agreed that up to two per cent you have come, from four per cent to three per cent and from three per cent to two per cent; you stop it there. We will not impose increased VAT on tobacco, sugar and textiles. Mr. Sinha has raised a question correctly.

While examining the Demands for Grants relating to the finance ministry for the current year, he has found out that at the time of Budget I took the approval of Parliament to give15,000 plus crore as compensation to the states, but I have given them around6,700 or so and the remaining is there. His question is: “Why have you not given it?” I have not given because that issue still remains unresolved. I told Shri Sushil Modi, when he came to see me as chairman of the Empowered Committee of the State Finance Ministers that let his officers, some of the state government’s officers, our officers, sit together, work out a mechanism of April, 2013, we will be able to do it. and then I will give that money. But I cannot run after a mirage. I must have some light visible at the end of the tunnel. The years 2010, 2011 and 2012 have passed; let us have the target that by April 1, 2013, we will be able to do it.

I am really delighted when Shri Yashwant Sinhaji had told me yesterday, informed the House yesterday that after DTC he will take it up the GST. If these two things we can do, I believe — I request the honourable House to believe me — that there will be a sea change, a major reform in the Indian Tax System which will be transparent; which will be non-discriminatory; which will be viable; and which will provide tax buoyancy, as it has been established with the introduction of VAT.

Please remember, shut your eyes and think of five-six years ago the magnitude of apprehensions you had that the state will lose huge revenue and today it is accepted and I am quite sure — surely I will not be there, I am not moving anywhere. I am not talking of that. Physically, I cannot remain there — a day will come, when we will see that what tremendous revenue buoyancy would be; how compliance will improve with the introduction of the GST and with the introduction of the DTC.

I thank, once again, chairman and members of the Standing Committee on Finance for the excellent report they have given on DTC. But I admit my own shortcomings that I could not fully implement it because I could not fully study it. I knew the proposals but to know the basic proposals and to study, understand and appreciate are different. Perhaps my intelligence level is low, that is why, I require some time to study and thereafter to firm up my view. Somebody’s IQ is may be much higher than me but my IQ is little less perhaps and that is why I wanted to read it thoroughly. It is an excellent report. I have gone through some pages. It is an excellent report and I am giving you an assurance that if you cooperate, we will get it done; get it passed in the Monsoon Session; and thereafter we can implement it. I have provided some of these provisions. A few of these provisions are already in the Finance Bill of this year.

GAAR had agreed to defer one year not because of any fear or apprehension. I may be a very small man, very little man but one thing I can assure and I can tell the distinguished members of Parliament that I am not afraid of any consequences. When I borrowed money, I was much younger. Will you enter into the Extended Funding Facilities with International Monetary Fund by entering into a boarding agreement of 5 billion SDRs which was the highest at that point of time? On the very floor of this House, many people told that you will ruin the Indian economy. India will have to be bailed out because IMF’s history is that one loan leads to another loan, to further loan and nobody has come out of the debt trap by borrowing money from the International Monetary Fund.

But I came out with my head on my shoulder; I came out, not on stretcher but on my foot, out of the IMF building declaring that India will not withdraw the last stranche of IMF borrowing of $1.9 billion. I do not know whether it has happened in any other country. We did it. It is not an individual credit. It has nothing to do with the individuality or personality of Pranab Mukherjee. It is the strength of the Indian economy; it is the resilience of the Indian economy. The contribution is by Indian farmers, Indian workers, Indian managers, Indian experts, Indian technicians.

From 10 million tonnes of crude production in the early Eighties, we increased it to 29 million tonnes. We could make up the 1979 oil crisis by substantially improving our own indigenous production and by reducing our imports so that the balance of payments situation improved.

I am concerned that today there are difficulties. But we shall have to address those difficulties. About the CST, I can assure the honourable members that I will discuss and sort it out with them. But please help us to have the necessary reforms in the introduction of the GST.

I would also like to share some important parameters so that there is no apprehension on the current account deficit and balance of payments situation. I am repeating that there is difficulty but the difficulty is not insurmountable because a large number of members have spoken on it. The current account deficit as a percentage of the GDP, in 1990-91 was three per cent; in 1991-92, it was 0.3 per cent; in 2007-08, it was 1.3 per cent; in 2008-09, it was 2.3 per cent; in 2009-10, it was 2.8 per cent; in 2010-11, it was 2.7 per cent; in 2011-12, it was four per cent. Naturally, there is a substantial change from three per cent to four per cent; and moreover from 2.7 per cent to four per cent.

Obviously, it is because of the huge 188 billion dollars trade deficit.

The FII flow has been reduced because the mutual funds, banks and other financial institutions of Europe, who invested in India, in Indian market, had to withdraw because of the crisis in their countries; and to contribute to build up the firewall, they had to protect them. But if we take into account the other parameters then we will find that it would be substantially helpful. As they have given the figure, their short-term debt to foreign exchange reserves, total external debt to the GDP ratio is 20 per cent. From 38.7 per cent, it has come down to 20 per cent in 2011-12. About the import cover, I have already stated. It is 7.3 months. The foreign exchange reserves today is $294.397 billion.

For current account deficit, why had I to impose the import duty on gold? As Mr Baalu has correctly pointed out that last year, our import bill on gold was $69 billion. Sir, $170 billion was the import bill of the petroleum products and $69 billion was the import bill of gold. I know the Indian people. Gold is a part of our culture. That is why I have removed the excise duty on jewelleries. But I want to retain the import duty on the gold bars. I have imposed a duty of just four per cent. I do hope that to some extent, the import of gold would be reduced. The non-residents who are staying for six months can bring up to one kilogram gold ornaments.

Anybody, who is staying for six months in any country as an NRI, can bring gold ornaments worth30 lakh. There is another impact also. There are a large number of jewellers, millions of jewellers who work on gold. If readymade jewels come from other countries, to that extent their demand will be affected. Therefore, I have to reduce it. Earlier it was 10 kilograms which they could bring. I have reduced it to one kilogram. In monetary value, at current prices it would be above30 lakh.

Mr Chairman, Sir, I would not like to take more time but I would like to address a couple of issues which have been raised. Regarding sovereign credit ratings, yes, particularly in the assessment of Standard and Poor, they are negative. Outlook is negative but not sovereign debt. Sovereign debt is not negative. If you notice, they have said on four parameters. Our sovereign debt rating is reasonably high. It is satisfactory. That is why, when the Standard and Poor’s rating assessment came, I said it is a signal and it is an alarm. I do not ignore it. I take note of it that corrective measures are to be taken.

The corrective measure is that we shall have to confine our fiscal deficit. The corrective measure is that we shall have to ensure the environment for investment, for more flow of fund and more flow of technology but at the same time, keeping our eyes on the factors which I described as domestic demand driven growth factors. We have one unique advantage which other countries do not have, that is, a huge untapped market of one billion plus people, 122 crore people. We have a huge market of consumer goods, consumer durables.

It has been pointed out and I also discussed it with my colleague, Mr Thomas because yesterday, in the morning Sharad Pawarji and many others expressed their concern about the availability of jute bags and the storing facilities of the food grains because this year the total food grain production would be 253 million tonnes. Earlier the system was, normally the FCI used to procure 25-30 per cent of the total foodgrains. The private sector used to intervene and they have their own facilities, arrangements of storing the procurement which they used to do. But today, either the state agencies or the Union agencies like the FCI are procuring more than 50 per cent, and I do agree that there is a mismatch between the creation of storing facilities and the level of procurement which is taking place.

If we do not go for procurement, then the farmers will be left at the hands of the private marketeers and they will have the compulsory sales. In some areas, we have found out that the rice millers, who were entrusted to procure, did not give the right type of Minimum Support Price (MSP) which was declared by the government for paddy. Last year it happened in some parts in the kharif season. Instead of1000 per quintal of paddy, they got500 or600 per quintal. Therefore, the government agencies have to purchase it.

When purchase is done by the government agencies, there is a mismatch between the level of procurement and the quantum of storing facility. We are having a three-pronged strategy. I had a detailed discussion with the food minister. He is also fully aware of it. I think he has discussed it with the Leader of the Opposition, Sushmaji. By middle of this month, the additional jute bags will be made available. Yesterday, I requested the West Bengal industries minister to be in touch with the jute industry because mostly the jute industries are located in Kolkata and surrounding areas so that they can step up their production.

There are many important trade union leaders from our Left Front and from Trinamul Congress, who can also persuade the jute mill owners to step up the production because this year’s procurement is much more. For instance, Madhya Pradesh government suggested that they will procure 65 lakhs of it, but actually it is 85 lakhs. When the farmers bring it, no agency will say that we cannot take it from you and it is impossible. Therefore, the procurement level has also increased. But, I would not agree to the suggestion that jute-packaging material should be substituted by the plastic material because that may help us temporarily but it will cause a permanent damage. A day will come when this jute will be used all over the world because it is a biodegradable packaging material, which is the packaging material of the future. Therefore, we cannot destroy this industry; we cannot destroy this packaging material.

In respect of certain other issues, I have mentioned in my initial observations yesterday that I would revert with certain relief proposals relating to Customs and Central Excise Duties. In that context, I propose to provide concessions in Central Excise Duty to chassis for commercial vehicles, ballpoint pen ink, polyester fibre and yarn made from waste, and certain parts of footwear.

Among the major relief on the customs side are exemptions to wood pulp, goods required for the setting up of solar power projects and certain raw materials for the manufacture of the solar cells. I do not wish to take the time of the House as regards the other minor changes. A notification to give effect to these changes would be issued in due course and laid on the table of the House. Apart from these changes, there will be certain other minor changes, which we will come to know from the notification.

The last point, which was referred to by Shri Advaniji, is about the operation against black money. My whole argument on the Vodafone was on that point. It is because my point is very simple. I would like to be guided either by the Double Taxation Avoidance Agreement or tax. There cannot be a situation where somebody will make money on an asset located in India and will not pay tax either to India or to the country of its origin by making some arrangements to certain tax haven areas, to certain tax haven locations through a complicated setting up of a series of subsidiaries, and having huge capital gains on the assets located in India.

I have explained that retrospective effect, to clarify the legislative intention, must be with reference to the date of enactment. How can the intentions of the legislature have any other reference point than the date of enactment, whether it is 1961 or 1951 or 1948? If clarificatory retrospective arrangement is to be made, it will be with reference to the date of enactment. But, the effect of the retrospective amendment in respect of the taxation will be covered by other laws. Here, the Income Tax Act Section 161 says that no tax can be levied beyond six years.