Economy will turn around in 2012-13: Pranab

New Delhi, June 11 (IANS) Finance Minister Pranab Mukherjee said Monday "necessary steps" are being taken to put India back on the growth path and the economy would turn around in fiscal 2012-13 that began april 1.

"I am expecting a turnaround in growth this year," Mukherjee said, addressing the annual conference of chief commissioners and directors general of Income Tax here.

"We are taking all steps to increase GDP (Gross Domestic Product) growth."

Terming the 6.5 per cent GDP growth in 2011-12 as "disappointing", Mukherjee said renewed global uncertainty emanating mostly from the Eurozone had affected domestic business sentiments last fiscal. The tight monetary policy also did not help.

He said a reversal of interest rate cycle, weak crude prices and a normal monsoon were likely to improve the economic conditions and the slowdown would not be as sharp as widely feared, and that the economy would grow closer to 7 percent this fiscal.

Economic growth slumped to a nine-year low of 5.3 per cent in the March quarter of 2012, while GDP growth for the full fiscal slipped to 6.5 per cent, down from the 8.4 per cent growth in the past two years.

In the Budget 2012-13, the government had pegged 2012-13 GDP growth at 7.6 percent (plus-minus 0.25 percent).

The finance minister also said a Direct Tax Code Bill aimed at simplifying the country's current tax regime could be tabled in the monsoon session of Parliament beginning mid-July.

"DTC will bring uniformity to decision-making," he said. "I am hopeful that DTC will become effective from start of April 2013, we should be prepared to implement it."

The proposed DTC will replace the existing Indian Income Tax Act 1961 and cut tax rates to bring more people and companies under the tax net.

The finance minister also called for raising tax collection to drive growth. "There is a need to increase the tax-GDP ratio."

The tax-GDP ratio was nearly 12 per cent in 2007-08 but has dropped to around 10.5 per cent in 2011-12. The income tax collection target for fiscal 2012-13 is pegged at Rs.5.71 trillion.