However, such a tax should be accompanied by astute austerity measures to cut wasteful government expenditure and reduction of wrongly directed subsidies, CII president Rahul Bajaj told reporters.

Bajaj, who met Prime Minister Atal Behari Vajpayee on Tuesday morning, said "Ehile I would not worry about a one-time tax, we should see its effect on the industry and the economy in the long term." The government should not kill the golden goose - industry - which was contributing to the economy by imposing taxes only, he said.

Commenting on the choice between growing fiscal deficit and additional taxes, Bajaj said while fiscal deficit and Kargil tax are not mutually exclusive, the industry should not be made inefficient by the burden of additional taxes.

The CII president said the recently announced hike in diesel prices should not be rolled back as it would sent wrong signals.

Bajaj, who charted out a 13-point agenda for the new government, said there was a need for a mid-term review of the economy to find the exact status of the fiscal deficit and possible measures to reduce it. Bajaj said a CII team requested the PM to retain Yashwant Sinha as finance minister.