New Delhi, 9 June, 2014

Gujarat Finance Minister Shri Saurabhbhai Patel today urged the Central Government to encourage and promote all the development oriented initiatives of the states that have the potential to contribute to the economic resurgence of the nation.

While speaking at the pre-budget meeting convened by Union Finance Minister Shri Arun Jaitley to obtain ideas and suggestions from State Governments, Shri Patel appraised that there is a need to kick-start the Indian economy by giving an impetus to investments in infrastructure and manufacturing with a focus on employment generation. He further suggested that the role of Micro, Small & Medium enterprises in generating employment and tapping local entrepreneurial talent must be recognized fully by making specific provisions in the Union Budget and in Government policies.

Shri Patel said that Gujarat welcomes well—rounded effort for reforming the indirect tax system that would rationalize tax collection as well as improve economic efficiency across the nation but loss to States’ revenues due to switch to GST should be compensated by the Centre and dues of CST should be re-imbursed by the Central Government.

Taking the issue of reduction of custom duty from 5 per cent to zero per cent on import for ship breaking, the Gujarat Minister strongly demanded that Government of India should consider waiver of Custom Duty on import of ships and bring it at par with import of melting scrap. He also requested the Union Finance Minister to bring in anti-dumping duty in the ceramic industry as huge imports were taking place from China. Also to promote the fertilizers industry, the custom duty on raw material for DAP i.e. Phsophoric acid, Ammonia etc is same as that of finished product. Therefore, a review of the duty structure of inputs and fertilizers is called for.

Speaking about expansion in banking services in order to ensure access to credit for the rural sector, Shri Patel urged the Union Finance Minister to ensure that the Union Budget 2014-15 emphasise on the speeding up of the process of financial inclusion by covering the unbanked villages at the earliest.

Hon’ble Minister emphasized the need to bring about clarity in promoting SEZs and export-oriented industries. Because of certain tax-related provisions, SEZs have become unattractive now, and hence a lot of infrastructure of SEZs remains unused now.

Shri Patel appraised that under AIBP guidelines, Central Government provides financial assistance to the tune of 90 per cent in Drought Prone Area Programme (DPAP) areas and only 25 per cent in Desert Development Programme (DDP) areas. In the “modified AIBP Guidelines” made effective from October 2013, this anomaly has been removed for new projects benefitting DDP areas/Drought prone areas with 75 per cent assistance. However, the ongoing projects remain stuck at the 25 per cent Central assistance, the Minister stated requesting the Union Minister to extend the same level of Central aid for ongoing project works as well.

He further mentioned that the pending issue of oil royalty shall be resolved at the earliest.

Shri Saurabhbhai Patel also demanded exemption of tax for Urban Development Authorities which are statutory authorities and performing planning and development functions.

The Gujarat Finance Minister assured the Centre that Gujarat will readily extend necessary support and cooperation to all initiatives that may be taken by the Union Finance Ministry, in the overall national interest.

Shri Hasmukh Adhia Additional Chief Secretary (Finance) also participated in the meeting.