Finance Minister P Chidambaram on Wednesday said all tax exemptions would have to be eventually removed.

"We would have an exemption-free tax regime with some few deserving exceptions in the future," he said.

Interacting with Confederation of Indian Industry's national council members, Chidambaram said, "We want to remove most exemptions. Exemptions like the ones given for the import of private jets have to go. They must be restricted to the most vulnerable sections of society, such as senior citizens, and for specific areas such as R&D and frontier knowledge areas."

He assured industrialists that inflation would be moderated. "There is no reason to believe inflation will not be moderated. In 1999-2000 inflation was at over 7 per cent for 11 weeks. In 2000-2001, inflation was at 6 per cent for 48 weeks. In May 2004, when the UPA government came to power, inflation was at 6 per cent, but it was brought down to 3 per cent in a year," he added.

The finance minister added that over the long-term, supply side issues would have to be addressed to ensure that inflation was within reasonable limits.

"There is a supply-demand mismatch, which can be addressed by increasing investments in agriculture. This year's Budget, therefore, focused on credit, seeds, water, fertiliser and electricity for the farm sector, in order to address stagnation in the production of wheat, rice and pulses," Chidambaram said.