Congress backs Kelkar report

Promises 10% GDP growth, 35% investment rate & rejuvenating capital markets.

The party, which released its vision document on the economy yesterday, asked why the Kelkar committee recommendations on direct taxes, which were designed to reduce evasion, and on indirect taxes were not implemented. It also promised a new form of development rebate in corporate taxes, allowing any company investing in development efforts to claim tax rebates.

The Congress warned of the threat to India's exports as the rupee continued to appreciate against the dollar in the absence of the Reserve Bank of India's intervention.

The party promised to eliminate the Centre's revenue deficit by 2007-08 and offered a calibrated approach to disinvestment. It made clear that it was for foreign direct investment rather than foreign institutional investment.

But Congress leaders evaded replies on whether the party would support foreign direct investment in retailing on the ground that the fears of the trading community would have to be addressed.

They also said labour law changes that led to a hire-and-fire system without attendant social security guarantees and assured employment flexibility would not be "socially and politically" acceptable.

"The important thing is create jobs," former Finance Minister Manmohan Singh said. This means no labour law reform will get Congress support in Parliament unless it is convinced that a social security net exists.