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India may impose tax to meet quake costs

India is likely to announce an additional tax to help rebuild the economy of the western state of Gujarat following the country's worst earthquake in half a century, a newspaper reported on Monday.

A financial daily said that Prime Minister Atal Bihari Vajpayee had authorised the imposition of a "Gujarat surcharge" following Friday's quake, either directly on tax payers or by increasing tariffs on certain items.

Finance Minister Yashwant Sinha was expected to announce the surcharge before he presented the Union budget for 2001-2002 (April-March) at the end of next month, the report added. It gave no details on how much tax could be levied.

Sinha said on Sunday that the cost of reconstruction in Gujarat, the country's second most industrialised state, would be enormous.

An influential Indian business lobby, quoted by another newspaper, put the quake damage at Rs 150 billion.

The Federation of Indian Chambers of Commerce and Industry (FICCI) said loss of buildings across Gujarat and in the commercial capital Ahmedabad would account for $100 billion.

About 80 per cent of the industrial units in Ahmedabad and Surat regions of Gujarat had become non-operational after the quake, FICCI President Chirayu Amin was quoted as saying. "These two regions have been quite devastated," he added.

Indian officials estimate that up to 20,000 people may have died in Friday's quake, which cut a wide swathe of destruction across Gujarat.

Since India opened its economy to the outside world in 1991, Gujarat has attracted some of the biggest foreign and domestic investments.

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