New Delhi, March 8: Finance Minister Yashwant Sinha on Wednesday ruled out a roll back of thedividend tax imposed on corporates in the Budget but assured the industrythat the government would not hesitate to change any provision which doesnot serve its purpose. "There is no way that we can roll back the dividend tax and maintain creditability about the Budget. The industry has to live with it," Sinhasaid while addressing the national council of the Confederation of IndianIndustry. Dividends accounted for only one per cent of the total marketcapitalisation and would not have a major impact on the industry, saidSinha. Sinha said the presentation of the Budget in the Parliament is not an endin itself and the government is ready to address any serious shortcomings,problems and irritants in it. The Finance Minister once again emphasised that the government has createdthe environment for a cut in lending rates by reducing the interest rate ongeneral provident fund and small savings to 11 per cent from 12 per cent. "Ihave done whatever I can," he said, adding that it was now up to the ReserveBank to take a decision on the lending rates. Regarding income tax on the employee stock option (ESOP) scheme, Sinha said the government was willing to consider an alternate tax scheme. It must be realised that ESOPs are meant as an attraction to retain manpower in India which might migrate otherwise. "I do not want to even appoint any committee on this issue. If the industry can suggest an alternative and there is a practical way, we will look into it", said Sinha. Sinha said his biggest disappointment was over the industry's lukewarmresponse to the excise package. Stating that the excise rates have beenreduced from 11 rates two years ago to four in the current Budget and otherdeviations from the past such as making fortnightly excise payment, Sinhasaid that the government has tried to keep the excise department off theindustry's back. The Finance Minister said the industry should not be over-concerned withthe 5.6 per cent fiscal deficit against the targeted four per cent. Thefiscal deficit has been fixed at 5.1 per cent during the current fiscal,largely on account of increased defence outlay in the wake of the Kargilconflict last year and the advances to state governments as per therecommendations of the 11th Finance Commission. "An additional expenditure of Rs 24,000 crore on account of the two has tobe incurred which is 1.2 per cent of the GDP. If this expenditure did nothave to be made, the fiscal deficit would have been four per cent," saidSinha. He assured the industry that the government would work towards bothgovernment expenditure control and downsizing. Regarding disinvestment, Sinha said in the absence of a complete nationalconsensus, it was not going to be easy to go ahead with disinvestmentprocess as planned. Keeping in mind the actual receipts from thedisinvestment process during the current fiscal, the government hasannounced a modest target of Rs 10,000 crore during 2000-01, said Sinha. About privatisation of public sector banks., Sinha said the government willnot close down any banks but would recapitalise the ailing ones. The recapitalisation would depend on one condition - that there should bea creditable plan. The government would, otherwise, appoint an authority foreach bank which would nurse it back to health, said Sinha. The finance minister said in the process of recapitalisation of the banks,government equity will come down below 50 per cent. As far as 33 per centgovernment equity in the banks is concerned, it will be be done throughParliamentary legislation, Sinha said, adding that the public sectorcharacter of the banks will continue.
