Finance Minister P Chidambaram has said that government could not continue to reduce taxes on various items to contain inflation but there was a need for moderating demand of affluent sections to curb rising prices.The fiscal situation is under pressure, obviously you have to moderate demand of the affluent sections that is something which we have to consider in due course of time, said Chidambaram.
Fiscal steps like cutting taxes etc. help to a point, but you cannot cut taxes indefinitely, because after a point, there is nothing to cut, said Chidambaram. This year, the government has so far abolished or reduced duties on various food items, cement, cotton, oil and other commodities to contain inflation that is expected to result in revenue losses of about Rs 27,000 crore.Referring to 13-year high inflation that touched 11.89 per cent for the week ended June 28, he said at the moment the government was relying on monetary steps to moderate demand. On fall in GDP growth prospects in 2008-09, he noted had there been no turbulence in the international market, it could have been 9 per cent. However, he said the growth during the current fiscal would above 8 per cent.
Fiscal steps like cutting taxes etc. help to a point, but you cannot cut taxes indefinitely, because after a point, there is nothing to cut, said Chidambaram. This year, the government has so far abolished or reduced duties on various food items, cement, cotton, oil and other commodities to contain inflation that is expected to result in revenue losses of about Rs 27,000 crore.Referring to 13-year high inflation that touched 11.89 per cent for the week ended June 28, he said at the moment the government was relying on monetary steps to moderate demand. On fall in GDP growth prospects in 2008-09, he noted had there been no turbulence in the international market, it could have been 9 per cent. However, he said the growth during the current fiscal would above 8 per cent.
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