FM needs to rethink – The Economic Times

This relates to “We withdrew the stimulus last year!” (ET March 4). TT Ram Mohan has rightly suggested that the tax-to-GDP ratio measures structural improvement. The FM needs to reconsider its medium-term debt-to-GDP target. Losing significant revenue by lowering IT tariffs seems odd. If the oil breaks the $75-$80 mark, the FM will have to raise the prices of petroleum products and borrow more. Most sectors like FMCG are raising prices sharply due to increases in excise duties and fuel taxes. Macroeconomic conditions such as high sovereign debt, tight monetary control and a fiscal strategy based on uncertain divestment/spectrum auction proceeds will impact private investment in 2010-11.

DB Naik

Mumbai, March 4th