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Govt debating simplification of tax structure, says finance secretary

Sheela Bhatt in New Delhi

"The simplification of the tax structure is being debated over in the finance ministry and the Kelkar Committee report is a step in that direction," said finance secretary S Narayan while taking to rediff.com.

"We are looking for ways that are doable and which can take into account not only the salaried class, but also the man on the street who does a lot of business in cash," he said.

The Kelkar panel report on direct tax reforms has come in for heavy criticism, both, within and outside the government. The report has generated heated debates at various industry association fora. However, with the opposition to the report on the rise, there are indications that some alterations could be made to the tax reform proposals before the Union Budget 2003-04.

Meanwhile, the preparatory meetings for the Budget are about to begin. The 'Budget group' will comprise three top government functionaries: finance secretary S Narayan, revenue secretary C Satyanarayana Rao, and expenditure secretary Dinesh Chandra Gupta.

Special invitees to the meeting at the first round of the discussions are the banking secretary, the chief economic advisor to the finance minister, and the additional secretary budget.

Narayan said: "It will take some more time. The formulations meetings will start in December."

Touching upon the issue of the co-operative banks scam in Gujarat, Narayan said: "The issue of the failure of co-operative banks in Gujarat is a serious one. We have taken note of it. This issue is pending since a long time. It is a problem of dual-control over these banks, and the Reserve Bank of India has asked to take some decision on it."

"Unfortunately, the Reserve Bank does not have enough power over the functioning of co-operative banks. For example, the RBI cannot appoint the management or exercise strict control over the money used by these banks," he said.

"In the co-operative sector, the RBI's role comes into effect normally after the irregularities are noticed. The regular functioning is looked after by the state co-operative registrar's office."

Commenting on the India's huge foreign exchange reserves of over $65 billion, he said that most of these reserves are being used 'in the Indian economy.'

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