Finance Minister holds pre-budget talks with Economic Advisory Council chief

New Delhi, Jan 16 : Finance Minister P. Chidambaram today held pre-budget talks with C Rangarajan, Chairman of the Economic Advisory Council to Prime Minister Dr. Manmohan Singh, and Civil Aviation Minister Praful Patel here today.

During the meeting Rangarajan reportedly sought moderation in indirect taxes, while Patel demanded lowering of taxes on Aviation Turbine Fuel.

Rangarajan said that India's economy is likely to grow at 8.5 percent in 2008-09, but the government should take steps to spur consumer durables' demand by moderating indirect taxes.

He said there were general discussions with the Finance Minister on whether the public investment can be increased to stimulate the economy, by making some adjustments in the indirect taxes on durable consumption goods.

Civil Aviation Minister Praful Patel also said that he has urged the Finance Minister to put Aviation Turbine Fuel (ATF) in the declared goods category.

"I feel the impact of the ATF (Aviation Turbine Fuel) prices is something that needs to be addressed by the government. The reason is the high cost of fuel because of international prices. Also the impact of higher taxes -- both at the Central and the State level -- is having serious impact on the viability and the long term financial health of the aviation industry," said Patel.

Currently, the tax imposed on the ATF, is around 8 to 38 percent and Patel wants it to be lowered to four percent under the declared goods category.

Further, the Civil Aviation Ministry has also sought a waiver on Service Tax for the business class.

If the Union Budget accommodates these demands, the airlines are likely to pass on the benefit to the passengers, resulting in the lowering of airfares.

ANI