Tuesday, June 28 2005 15:32 Hrs (IST) - World Time -

New Delhi: Asserting that the economy was in a "resilient" mode, Finance Minister P Chidambaram today (Jun 28, 2005) said that inflation was under control, but the challenge was to mobilise resources to rev up investments.

Addressing the National Development Council (NDC), he admitted that the country was short as far as planned investments were concerned, citing that only 50 per cent of the MTA targets could be achieved in the first three years.

"We have to make up the balance 50 per cent in the remaining two years, that is 2005-06 and 2006-07, which is a tall order," Chidambaram said.

On the need for raising resources, Chidambaram said that the centre and State must garner it from tax and non-tax sources and there was a need for improving tax GDP ratio for growth and fiscal consolidation.

The Centre and States must expand tax base, rationalise the tax regime and improve tax administration and all States should focus on effective implementation of a modern Value Added Tax (VAT) regime to improve compliance and gain in terms of revenues.

On the reforms in direct taxes at the central level, he said that Government would continue to simplify and consolidate direct taxes, continue the drive to collect tax arrears, plug loopholes in evasion and rely on information and intelligence to reach the tax evaders.

On the indirect taxes, Chidambaram said that the movement towards a Central Value Added Tax (CENVAT) rate would continue and the Government would further reduce peak customs duty by 5.0 per cent and make the service more comprehensive.