New Delhi, Mar 6: Allaying fears of overheating of economy, the Government today exuded optimism that growth story would continue in 2008-09 too, notwithstanding the weak global trends.

Finance Minister P Chidambaram, in his post-Budget interaction with industry chamber Assocham, drew parallels with neighbouring China and referred to its Prime Minister Wen Jibao's speech to drive home the point that the growth story must be intact.

"Wen told Parliament of China...Growth story must be intact but it should not lead to overheating.... In our case growth story must be intact, there is no danger of overheating in India," the Finance Minister said.

"He (Wen) said we (China) must control inflation, their inflation is 7.1 per cent and ours is 4.89 per cent and we must also control inflation," Chidambaram said.

Both the countries make similar progress and must learn from each other, Chidambaram said.

"The only difference is that while Chinese are proud of their achievements, we seem to be too modest about what we have achieved in the last 15 years. We should take pride in what we have done, but there is still a long road ahead," he said.

Defending his budget proposal to increase short term capital gains tax rate, Finance Minister P Chidambaram today said it would encourage the investors to hold on to their investments for a longer period in the markets, which are currently volatile.

"The idea is because of volatility in the market, we must encourage investors to stay invested for longer term, and I am doing precisely that by raising short term capital gains tax from 10 to 15 per cent," Chidambaram said during his post-Budget interaction with industry chamber Assocham.

In this context, the Finance Minister recalled legendary investor Warren Buffett's advice to investors: Correct approach to the stock market is put your money in the stock market and then say stock market is closed for 10 years. And look for returns after ten years.

He said by raising the short term capital gains tax, he is also equating the levy to dividend distribution tax of 15 per cent.

"From shareholders point of view if we hold a share and receive a dividend, that dividend is subject to 15 per cent dividend distribution tax. When he sells a share and makes profit or capital gain, why should he not be subject to the same tax as 15 per cent," he asked.

He said short term capital gains and long term capital gains are not distinguished in many jurisdictions and even capital gains and income are not differentiated in many countries.

But in India, these distinctions are there historically, Chidambaram said adding the Budget has not done away with these distinctions.

On the industry's demand that double taxation in dividend distribution tax should be avoided at all levels of companies, Chidambaram said tax laws should not be bent to encourage shell companies, that are created just for tax shelters.

"If you search your hearts, you know you are not speaking for multi-layer operation companies, your plea is on behalf of multi-layer shell companies, which are simply created and operated from one desk by one man just as tax shelters," the Finance Minister said.

The Budget 2008-09 proposed that if a parent company pays dividend to its shareholders, tax on it would be reduced by an amount of dividend received by the company from its subsidiary.

The Finance Minister said actually each company is a separate assessee.

Nevertheless, in response to the felt need that many projects are now undertaken by special purpose vehicles (SPVs) or by joint venture companies that are being created only for execution of projects, the Budget allowed an exemption or set off for one layer.

"Nobody has told me why should there be multi-layers, why should there be multi-layer companies. In terms of good corporate governance, companies should be widely held and companies must engage in businesses," he said.

He further said, "It is not our intention to encourage inter-locking, multi-layer, multi-level companies which are controlled at one point, but for the purpose of tax shelter all these layers are created."