Govt prefers tax refund to providing subsidies to exporters

New Delhi, Dec 20: The government today said it is working on a formula with the states to provide a respite to the exporters amid the appreciating rupee. ''We are in discussion with the state governments for a system on refunding taxes rather than providing subsidides,'' Commerce and Industry Minister Kamal Nath said at the PHD Chamber Conclave of Governance here.

Exporters want a level playing field and they want the exports to be competent with the global market, he added. Prime Minister Manmohan Singh earlier this week had come down heavily on providing subsidies saying if subsidies do not reach the poor, it does not address the objectives they are meant to. ''We spend far too much on subsidies in the name of equity, with neither equity objectives nor efficiency objectives being met,'' Mr Singh had said.

Mr Nath, talking on the same lines said, ''subsidies lead to efficiency distortion. If taxes paid by the manufacturers can be refunded, it would help them becoming more competitive.'

UNI