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FM does not rule out dismantling of FIPB, mulls countrywide VAT

Finance Minister Yashwant Sinha has ruled out competitive devaluation even while admitting that there is a threat of Chinese devaluation.

In a television interview, the finance minister was asked whether there was a contingency plan to defend the rupee. He replied: ''The Chinese are threatening the world with devaluation, are you talking of a war chest to protect the rupee?''

Sinha did not rule out the dismantling of the Foreign Investment Promotion Board. He said the government would take a collective decision on the matter.

On the Tata airline project, Sinha said ''No government in a democracy would be able to completely ride roughshod over the feelings of MPs which includes former ministers who have dealt with the subject.''

Asked about the initiatives to revive sluggish industries, Sinha said, ''I cannot go on reducing taxes all around and still keep fiscal deficit. I have no magic in hand,'' he said.

Attributing low demand for consumer durable goods last year to poor agricultural production, Sinha said government data suggested a four to six per cent growth in agriculture this year. ''That should put money in people's hands, and generate the kind of demand we are talking about,'' he said.

In an unrelated development, Sinha has convened a meeting of the chief ministers and finance ministers of state governments in New Delhi on Monday to consider several pending issues, including introduction of value-added tax nationwide.

Involvement of state governments in the regulation of the non- banking financial companies will also be taken up.

Stamp duty reform, restructuring of the Registration Act and rationalisation of central sales tax are the other issues that will be discussed.

In the last such meeting of the finance ministers of states/ Union territories held in July 1997, a committee of state finance ministers was entrusted with the work of evaluating the progress made towards, and charting a timeframe for, the introduction of VAT in lieu of sales tax in all the states and UTs.

A group of central and state government officers and experts was also constituted to rationalise and harmonise the sales tax and stamp duty rates. Monday's meeting proposes to discuss progress on these issues.

UNI