Bigger economic crisis if no urgent steps, warns Congress MP in Rajya Sabha

[Psalm 51:17]

http://timesofindia.indiatimes.com/business/india-business/Bigger-economic-crisis-if-no-urgent-steps-warns-Congress-MP-in-Rajya-Sabha/articleshow/13152518.cms

5/15/12

NEW DELHI: Amid fragile global economic recovery and its impact on India, Congress member and former Planning Commission member Bhalchandra Mungekar on Tuesday warned that if government does not take "urgent" steps, the country could face a bigger crisis.

"If we do not adopt some of the urgent economic measures, I apprehend that a bigger crisis may be awaiting the country," he said participating in the discussion on the Finance Bill, 2012 in the Rajya Sabha.

While congratulating finance minister Pranab Mukherjee for intending to amend the FRBM Act, Mungekar said the decision to roll back some tax measures is "most disturbing".

"What is most disturbing...was that the FM was forced to roll back rationalisation of some tax measures with respect to the import of gold and other precious metals despite the adverse consequences," Mungekar, also a noted farm economist and former vice-chancellor of Bombay University, said.

He pointed out that Rs 57,063 crore revenue was forgone only due to tax exemption given for import of diamond and gold. In 2010-11, the amount was Rs 49,164 crore, he said.

"I am unable to reconcile to the FM's decision of giving exemptions on the import of gold and diamond in the preceding two years knowing fully well the difficulties in withdrawing the exemptions once given," Mungekar said.

He said one of the primary drivers of the current account deficit has been the growth of about 50 per cent in imports of gold and precious metals in first three quarters of 2011-12.

Pointing out that inflation causes the "greatest anger" particularly amongst poor and vulnerable sections, he said, "the government, therefore, must take all preventive and curative measures to control inflation". He also sought urgent measures to plug loopholes in the public distribution system. Inflation in April shot up to 7.23 per cent in April from 6.89 per cent in the previous month.