'No introduction of long term capital gains tax'

New Delhi, May 20: Stating that the 'India growth story' was intact, Finance Minister P Chidambaram today turned down the demand of the left parties to introduce long term capital gains tax and clarified that the government will not unilaterally revisit the Mauritius Tax Treaty.

"The government has no intention to introduce long-term capital gains tax for securities traded in the stock markets," Mr Chidambaram told a Press Conference here.

'We are also not proposing to unilaterally review the Mauritius tax treaty," he said in an apparent attempt to pacify the turbulent stock markets.

During the last two trading sessions, the SENSEX registered the steepest ever fall in its history as well as experienced high volatility.

The Finance Minister was dismayed at some ''ill-informed reporting and editorialis by media organisations and asked journalists to be cautious while reporting on sensitive issues.

Mr Chidambaram said "The India growth story continues to be a growth story" and claimed that the fundamentals of the economy were "sound and strong"-- high GDP growth, buoyancy in growth of the manufacturing sector,low inflation and burgeoning foreign exchange reserves.

The Finance Minister said the circular issued by his ministry, which many believe triggered the crash, was only intended to solicit the comments of the public and there was nothing in it to suggest that FII's would be taxed a new rate. "The position in this regard is well known to the FIIs", he said.

''India has reserves of 163 billion dollars, inflation has been contained at less than four per cent, manufacturing has been growing at 9 per cent, monsoon has been encouraging and we expect a good monsoon,'' Mr Chidambaram said to butress his claim that the economy was going strong. Mr Chidambaram attributed the steep fall in the stock markets to a combination of factors-- hardening of global interest rates, attractiveness of other competing markets, sharp fall in international commodity prices and some metals.

''We accept that markets will rise and fall,'' he quipped.

The Finance Minister advised the retail investors to enter the bourses only after doing meticulous research, and in case this is not beng possible, they should take recourse to mutual funds.

Asked whether the FIIs were indulging in blackmailing the government, Mr Chidambaram said they were not the only players in the market. In the derivatives market, he said, their share was ten per cent of the total volume and in the cash section they accounted for nearly ten per cent of the entire transactions.

UNI

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