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FM Pranab Mukherjee, who had refrained from tweaking the tax rates while tabling the interim budget, also made it clear that the 4% across-theboard cut in excise duty, which was announced as a part of the first stimulus package, will be valid beyond March 31, 2009. The excise duty cut of 2% will also apply. The government slashed excise duty on bulk cement by 2% to 8%, or Rs 60 per metric tonne to Rs 230 per metric tonne. Cement companies have the option of choosing between the ad valorem or specific duty. The move will bring down the cost of housing and construction companies and give a fillip to demand in the cement industry reeling under a demand slowdown. The 2% cut in excise duty will also bring down the cost of steel for this sector.

“It is another stimulus,” he told reporters after the passage of the interim budget by Lok Sabha. “It will have its desired impact, because we have given some concessions for the export sector, particularly those sectors that are employment generating like gems and jewellery, garments and handicraft,” he said. Mr Mukherjee also extended his bounty to IT companies such as Infosys, Wipro and TCS, which were not able to avail of the income-tax waiver under the Special Economic Zones Act as their units were set up as subsidiaries and not floated as separate arms. “It has been decided to remove this anomaly through necessary changes in the Act,” he said. However, the needed amendment to Section 10 AA would be introduced in the regular budget by the next government.

In addition, the Centre also extended the flexibility to states to deviate from fiscal consolidation targets by 0.5% beyond March 31, to boost infrastructure and enable them to generate more employment. The facility had been extended as a part of the first stimulus package unveiled in December. The minister also called on states to spend their surpluses.

He said RBI had also taken monetary measures to provide adequate liquidity to banks and banks can reduce interest rates to create demand.

The minister said he was unable to announce more measures in the interim budget because he wasn’t allowed to do so by Constitution, as the government only has a few more months left in its term. “How do you expect to burden the exchequer with a series of tax proposals?” he said in his reply to the debate on the interim budget.

He said the UPA government had taken these measures as “the full impact of the recession in other parts of the world, especially Europe and Asia, was yet to unfold.”

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