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PM hints govt is open to Vodafone tax review

Jul 06, 2012 07:35 AM IST India India

New Delhi: In his first interview since taking over as the Finance Minister, Manmohan Singh has spelt out the road ahead to higher growth. In an interview to the national daily, Hindustan Times, Manmohan Singh said that on the agenda is the revival of the Insurance industry and mutual funds.

The Prime Minister also said that controlling fiscal deficit was a priority. But the big clue came with the Prime Minister hinting at the review of the Vodafone retrospective tax. He said that the government will have no arbitrariness in tax matters.

"We want the world to know that India treats everyone fairly and reasonably and there will be no arbitrariness in tax matters," he said.

The statement assumes significance in the context of a raging controversy over the Income Tax amendment to re-open tax demands with retrospective effect from companies like Vodafone over acquisition of companies having operations in India but registered abroad to avoid taxes.

The amendment and another provision GAAR (General Anti Tax Avoidance Rules) have been blamed for the reluctance of foreign investors to invest in India.

Manmohan Singh also said that the government will work to improve response times for business proposals.

But he also gave a word of caution saying political consensus is needed for some key economic decisions, hinting that key reforms won't be easy.

"More important is that we need political consensus in the government on some policies. These are genuine differences in opinion. So, in a democracy, consensus building is the key to long-term economic success and we are steadily moving ahead in doing that," he said.

The Prime Minister, who now has the additional responsibilty of Finance after the resignation of Pranab Mukherjee, said his officials were working on a set of measures to rein in the fiscal deficit.

Singh said the absence of investment avenues has pushed Indian savings into gold.

Asked about corruption, Singh said he does not think "there has been any explosion in corruption under his watch."

"Just as the pessimism over the economy is more in the markets and less on the ground, even in the case of corruption, I do not think there has been any explosion in corruption under my watch," the Prime Minister said.

(With additional information from PTI)