Wednesday, December 29 2004 12:08 Hrs (IST) - World Time -

New Delhi: Finance Minister P Chidambaram may present a radically different Budget in February 2005 that will give a thrust to "massive tax reforms" to make the structure "simple and stable" and raise the tax to growth ratio.

Perked up by buoyant economic fundamentals as year 2004 draws to a close, he outlines his reforms agenda that includes simplification of both direct and indirect taxes, raising savings and attracting investment in all sectors.

In an interview, he also spoke of the strong need for attracting huge investments in agriculture and infrastructure running into a few hundred billion Dollars, quicken banking reforms by coming out with a roadmap and also Government's monitoring of inflation and management of money supply.

Asked about the thrust of the budget exercise, which has already begun and whether it would be radically different from the earlier budgets, Chidambaram said, "We are trying to have a growth-oriented and inclusive budget, which cannot leave any section."

"You must be different in a substantive way. You will have to wait for the exercise to complete. Keep the tax structure simple but it should also be revenue generating," he said adding, "It is for you to judge whether it is radically different."

Chidambaram said that reforms of the tax structure were linked to keeping it simple and to raise the tax-GDP (Gross Domestic Product) ratio from the present nine per cent to beyond 11 per cent. The main objective was to have a tax regime that will remain stable over the next four years.

Secondly, he said, "We must encourage ways and means to encourage savings rate which is satisfactory but not good enough to sustain higher growth."

"The savings, which are at present 22-23 per cent of GDP needed to be improved by 2-3 per cent. We have savers but they will have to be turned into investors," he said.

As infrastructure sector needed huge investments, he said, "We need sound and alternative methods to raise resources from banks, insurance and pension funds."

In this connection, Chidambaram said that the Government was committed to putting in place Pension Fund Regulation and Development Authority by January 1, 2004.

There could be a few days delay in the issue of an Ordinance in this regard in the face of Tsunami disaster that hit South India. But it was coming, he said.

On criticism resounding various steps to widen the tax net, Chidambaram said it was to ensure that nobody who had the potential to pay taxes escaped the net.