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February 27, 1999
'The projected fiscal deficit is a major risk factor'
Dhruv M Sawhney
I feel the anomalies that existed in the capital goods industry earlier still remain or have got worse.
The power sector was earlier subject to a 20 per cent basic customs duty. Now it seems normal power projects can be imported at a duty of 5 per cent and mega power projects at a duty of 0%. The excise duty on capital goods has been raised by 3% from 13% to 16%. While for raw materials such as steel, it has only been raised by 1%.
The positive aspect are the rationalisation of duty structure, stress on water, devolution of power to the Gram Sabhas and a move to stimulate the housing sector.
Many committees have been formed and I only hope that implementation does not remain far behind as it has during the past. The projected fiscal deficit, with or without adjustment, is a major risk factor unless government expenditure can be substantially curtailed.
The rise in interest payments and unsure weather conditions are factors that necessitate a greater watch on revenue collection, and therefore PSU divestment must start immediately.
Dhruv M Sawhney is a past president, CII
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