SJM splinter group demands reversal of reform process

Wants GAAR implemented at the earliest, seeks scrapping of DTAA

Swadeshi Andolan, a splinter group of Swadeshi Jagaran Manch, led by former Bharatiya Janata Party leader K N Govindacharya, on Tuesday asked the government to reverse the globalisation process and promote domestic investment to help the country tide over the economic crisis.

In a representation to Finance Minister Arun Jaitley ahead of Budget preparations, the Andolan suggested the government should enhance public investment in rural areas in sectors such as transportation, irrigation, education and healthcare. It asked the government to eliminate the pervasive incentive structure, which favours the foreign investor against the domestic one.

To find a solution to fiscal crisis, the Andolan urged the government to implement General Anti Avoidance Rules (GAAR) at the earliest; terminate or renegotiate Double Tax Avoidance Agreements (DTAA) and increase the corporate tax by reviewing various exceptions. "Still effective corporate income tax rate is only 23 per cent, which is much lower than many developed countries," said K V Biju, All-India organising secretary of the Andolan.

The group asked the government to impose ban on diesel export. "If we ban diesel export, we could reduce the price of diesel in internal market. India should not import crude oil in dollar terms. Also, it should import fossil fuel from countries such as Russia, Iran and Venezuela, which are ready to trade in rupees."

According to the Swadeshi group, the government should first increase the import duty to the maximum bound level. "Now we are only charging 9.8 per cent duty for industrial products even though our bound duty is 34.6 per cent. The only way to save our industry and rupee is to increase the duty up to the bound level."

It wanted the government to restrict foreign institutional investments (FIIs) and impose at least three-year lock-in period on FIIs and impose heavy tax on the profits repatriated on the lines of Brazil.