Kelkar asked to chalk out fiscal consolidation road map
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Vijay L Kelkar, author of India's road map for the Goods & Services Tax and chairman of 13th Finance Commission, will draft India's fiscal consolidation road map, announced finance minister P Chidambaram,
Drafting in Kelkar could give a strong signal to investors of the finance ministry's new proactive stance to merge growth concerns while ensuring taxes remain buoyant. The former finance secretary and adviser to finance minister Jaswant Singh will, along with Indira Rajaraman, emeritus professor NIPFP and Sanjiv Mishra, former expenditure secretary and member 13th Finance Commission form a three member team to essentially create a new path for implementation of GST and a tight fiscal marksmanship.
The appointment of Kelkar comes soon after Parthasarathi Shome, director ICRIER has been given an extended mandate to look into the issues involving controversial tax amendments including general anti-avoidance rules (GAAR) and retrospective amendments in the Budget 2012-13. Although implementation of GAAR has been deferred by a year, these amendments have been squarely blamed for the dip in investor sentiments and slump in investment plans.
Chidambaram will obviously hope that the appointment of Kelkar, the architect of FRBM Act sends the right signals about the seriousness of the government to bring in reforms in fiscal policy. The minister will also be helped by another panel under former CBDT chairman N Ragachary that has been tasked to look into matters pertaining to the IT sector and safe harbour provisions in international taxation.
Announcing the formation of the panel, Chidambaram said, "We intend to unveil, shortly, a path of fiscal consolidation... Adjustments must be made both on the revenue and the expenditure side. We have asked (the panel) to assist the government in formulating the path... and we expect that the work will be completed in a few weeks".
Chidambaram also said that directions have been issued for reviewing the retrospective amendments to increase investments in the country to 38 per cent of the GDP, last achieved in 2007-08.
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