PMs first call: Must fix tax problems,revive animal spirit in economy

Singh is scheduled to meet RBI Governor D Subbarao on Thursday,where the issues of high interest rates in the economy and inflationary pressure are expected to be discussed.

Foreign investors had reacted strongly to the Budget provision to allow the income-tax department to raise retrospective tax demand in mergers and acquisition deals routed through offshore entities. Since March,there has been a significant outflow of capital from India,which Singh flagged. Investor sentiment is down and capital flows are drying up, he said.

Singh met close aides Planning Commission deputy chairman Montek Singh Ahluwalia and PMs Economic Advisory Council chairman C Rangarajan in the morning,and finance ministry secretaries in the evening. We discussed a range of issues, Rangarajan said,but declined to give details.