Prime Minister Manmohan Singh on Saturday announced his resolve to put government finances in order by cutting down subsidy on oil and implementing the fiscal deficit reduction blueprint proposed by finance minister P Chidambaram, saying the unsustainable growth in oil subsidy is coming in the way of social spending. Singh also pledged to speed up share sale in state-run companies to find the resources to build ports and highways and to take up welfare measures.
At the 85th annual general meeting of industry chamber Ficci here, the PM made it clear his priority was to step up investments and savings rate in order to spur economic growth to 8% in the next five years, which, he admitted, was an onerous task. The ruling coalition, which came to power on the promise of inclusive growth, would also strive to cut down unmanageable subsidies without compromising on the benefits meant for the poor.
I stand before you to reassure you that our government is committed to doing everything that is possible to alter the policy environment, to accelerate economic growth and to make the growth process socially and regionally more inclusive, he said.
Under-pricing of energy, particularly electricity and petroleum products, has greatly affected the resources available for investments in infrastructure and social development, said Singh, adding that the oil subsidy is more than what the government spends on health and education together. The Budget this year had allocated R43,580 crore to help state-run fuel retailers IOC, HPCL and BPCL. Last week, the government had to seek Parliaments approval for another R28,500 crore of oil subsidy.
Singh threw his weight behind the fiscal consolidation roadmap prepared by finance minister P Chidambaram that speaks about containing fiscal deficit at 5.3% of GDP this fiscal and to 3% in three years.
The issues of priority for New Delhi include completing the review of the General Anti-Avoidance Rules introduced earlier this year and which apparently intimidated foreign investors. So is a review of the taxation of the IT sector, on which an expert panel is advising the finance ministry. The proposed direct tax code, which seeks to simplify and modernise income tax law and the proposed goods and service tax are also high on the priority list, said the PM.
Singh, who had to preside over an embarrassing roll back of rail passenger fare earlier this year due to political opposition, wants to make setting of rail fare more transparent. The Railways are working on a rail tariff authority, which will make fare setting a more rational exercise, he said. He also hoped the land Bill will make land acquisition more fair and transparent.
Singh also urged the industry to do more on inclusive growth.
* Cut subsidy on oil
* Implement fiscal deficit reduction blueprint proposed by FM
* Priority to DTC, GST, GAAR, taxation of IT sector
* Speed up disinvestment
* Setting of rail fare to be more transparent