FM hints at 14% GST rate

Says there is a scope for deposit and lending rates to drop.

Finance Minister P Chidambaram today hinted at a central goods and service tax (GST) rate of around 14 per cent.

GST is scheduled to be implemented from April 1, 2010. There will be one or more central and state GST rates for all goods and services.

"When we move towards GST, whatever its number be, surely it cannot accommodate 16 per cent central excise duty. I don't know what the final number will be, but it has to be lower than 16 per cent," Chidambaram said at a meeting organised by the Confederation of Indian Industry here.

Chidambaram cut excise duty in Budget 2008-09 to 14 per cent from 16 per cent. However, the task force on the Fiscal Responsibility and Budget Management Act, chaired by Vijay Kelkar, had recommended a 12 per cent central excise rate.

"I have taken the first step to signal to the whole country and especially to the state governments that as I look forward to accommodate my financial interest within the final number, you do the same to come to a consensus on the final number," Chidambaram added.

On the possibility of moderation in interest rates, Chidambaram said it was the domain of the Reserve Bank of India. "I personally think there is a scope for deposit and lending rates to drop," he added.

Chidambaram reiterated that the government hoped to maintain a growth rate of around 9 per cent and contain inflation to around 4 per cent in the coming years.

On disinvestment in public sector undertakings, he said, "We have listed 45 central public sector enterprises and we wish to list more in the future."