The minister said while replying to supplementaries during Question Hour in the Rajya Sabha that fiscal prudence was required to prevent extra borrowing to finance current expenditure. Jaitley's statement comes closer to his maiden budget scheduled for Thursday, which is unlikely to contain many populist measures.
"And, the current acceptable level, which by the FRBM Act, is that you have to move towards a fiscal deficit of 3%," said the minister. The interim budget for 2014-15 had projected a fiscal deficit of 4.1% for the current year, down from the revised estimate of 4.6% for 2013-14. The level of fiscal deficit during the current year up to May is Rs 2,40,837 crore, which is 45.6% of Budget Estimate of 2014-15, the minister said.
The minister said he would personally have been happier if the containment of fiscal deficit takes place by expansion of the economy, by greater tax buoyancy and by greater tax collection, rather than by contracting expenditure.
On a question on mounting tax arrears that need to be collected, the Minister said tax collection drive will be intensified. "As far as your other point is concerned about people from whom taxes are due and not collected, we certainly will intensify that action and I am one with you that those are the people to whom no laxity has to be shown," he said. Direct tax arrears demand has risen to Rs 6.75 lakh crore in April 2014, up from Rs 5.8 lakh crore a year ago.
In the meanwhile, Minister of State for Finance Nirmala Sitharaman informed the Upper House in a written reply that the ambitious Direct Taxes Code, which proposed to overhaul of the six-decade old Income Tax Act, has lapsed. She, however, did not give any commitment on reviving the same. "With the dissolution of the 15th Lok Sabha, the Direct Taxes Code Bill, 2010 has lapsed," she said.