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CESC’s Goenka Says High India Taxes Better Than Widening Deficit

Sanjiv Goenka, chairman, RP-Sanjiv Goenka Group, and vice chairman of utility CESC Ltd., comments on India’s annual budget released today by Finance Minister Pranab Mukherjee.

Goenka’s comments were sent via e-mail.

“The widening of the base for services taxation with a negative list of 17 socially desirable services is a rational approach. The increase in service tax, along with the increase in excise duty from 10 percent to 12 percent, will however raise prices correspondingly all round. However, this measure is a better alternative to a higher budget deficit, which in spite of the additional revenue of 410 billion rupees, will leave a deficit of 5.1 percent in 2012-13.

‘‘The Finance Minister has paid special attention to the power sector, which needed expeditious expansion. The 100 billion-rupee, tax-free bonds for power sector, exemption of thermal power companies from tax for 2 years, extension of sunset clause, as also the facilitates for coal mining with exemption from customs duty on machinery for mining and on imported coal, will speed up development of new generating capacities as also improvement in the plant load factor.

‘‘The reduction in withholding tax will provide stimulus to a number of infrastructure activities.’’

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