Duty cuts aimed at pleasing investors at Davos: Yechury

Questioning the rationale behind the government's decision to reduce customs duties to check inflation, CPI(M) Politburo member Sitaram Yechury has sought to link it with the meeting of the World Economic Forum at Davos in Switzerland.

One of the important issues at Davos summit is that of trade liberalisation, i.e. removal of tariffs and duties on imports and exports.

"The decision to drastically reduce customs duties across the board in India comes on the eve of this year's Davos summit. Is the real intent of this slashing of duties a signal to please the international investors? Is the concern for containing inflation, thus, an eyewash?" Yechury said in the editorial of the latest issue of People's Democracy, the CPI(M) mouthpiece.

The government has announced an across the board reduction of customs duties 'under the pretext of seeking to control inflation'. By merely making imported items cheaper, the general price rise couldn't be contained as was witnessed in the recent past when imports of foodgrains did not stem price rise in essential commodities, said the senior CPI(M) leader.

"Such a liberal reduction in import duties will adversely affect domestic production of the same commodities leading to de-industrialisation and consequent growth of unemployment in India...Such an across the board reduction of duties means reduction of government revenues. The credibility of the UPA government comes under severe question when it argues that it does not have enough resources to implement Common Minimum Programme promises," he said.