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| Saturday, 10 January 2004 |
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India cuts taxes as govt backs early polls NEW DELHI, Friday (Reuters) India cut taxes on an array of goods from fridges to mobile phones as the ruling coalition backed an early general election to cash in on an economic boom and peace moves with Pakistan. The cuts of up to 50 percent are the strongest and clearest signal yet India will go to the polls before June. "If there was any lingering doubt, it should now be discarded because they have gone too far now not to be committed," political analyst Inder Malhotra told Reuters. "They are trying to introduce as many populist measures as they can." After the tax cuts were announced, a meeting of the almost 20-strong Hindu nationalist-led coalition gave Prime Minister Atal Behari Vajpayee the power to call an election any time. "The meeting authorised the prime minister to take whatever decision he deems fit in so far as the forthcoming general elections are concerned," Defence Minister George Fernandes told reporters after the talks. Vajpayee and his Bharatiya Janata Party (BJP) have been clearing the decks to give themselves the option to call an election in April or May instead of going the full term to October. From late May, temperatures nearing 50 degrees Celsius (122 degrees Fahrenheit) in the north followed by monsoon flooding until September, make campaigning almost impossible. Deputy Prime Minister Lal Krishna Advani has already said the BJP favours an early ballot and officials say the government plans an interim approval of spending in February instead of a regular budget. Thursday's announcement included cutting the cost of imported machinery and allowing Indians to carry a laptop into the country tax-free. "The measures taken today would have possibly featured had the finance minister presented a budget on February 28," said Ernst and Young chairman Kashi Memani. "This is a definite signal of elections now being held early." Markets approved the changes, boosting the main share index, and analysts said that despite the cost, they would stoke consumer spending, ease inflation and showed the government was committed to economic reform. "The economy is on a roll and it is the judgment of the government to give a further impetus to growth," Finance Minister Jaswant Singh told reporters. |
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