Finance Minister Arun Jaitley on Wednesday exuded confidence that the growth rate in the next fiscal could exceed 7-7.75 per cent if there is less political obstructionism and the government is allowed to push through important Bills like GST and the bankruptcy law.
“With all the steps we have taken (in the Budget) and hopefully if the next financial year is politically not as obstructive as the last one (and) we are able to push through many more reforms, I am sure we will beat the target that Arvind (Subramanian) has set in the Economic Survey,” he said.
The minister was speaking during a post-Budget interaction with captains of the Indian industry.
Chief Economic Advisor Arvind Subramanian, in the Economic Survey, projected a growth rate of 7-7.75 per cent for the next financial year, which some experts described as “modest”.
The economic growth rate for 2015-16 has been estimated at 7.6 per cent, the highest in the last five years.
Detailing the initiatives proposed in his Budget for 2016-17, Jaitley said the goods and services tax (GST) Bill and the bankruptcy law are pending in Parliament and the government will pursue them.
The Constitution Amendment Bill to roll out GST, dubbed as the biggest indirect tax reform since 1947, is pending in the Rajya Sabha because of stiff opposition by the Congress. GST will subsume central excise, state VAT, entertainment tax, octroi, entry tax, luxury tax and purchase tax on goods and services and will bring about a uniform indirect tax regime throughout the country.
The government last year introduced the Insolvency and Bankruptcy Code, 2015, in Parliament. The Bill will make it easier for companies to wind up unviable businesses and also improve ease of doing business.
Jaitley said that while pushing economic reforms and increasing public spending, the government would stick to the the fiscal consolidation path.
“While improving public investments and creating an environment for both global and domestic investments to move up, maintaining fiscal discipline was extremely important,” he said, adding that the nation can not claim to be the fastest growing major economy in the world if it doesn’t maintain fiscal discipline.
Three major contributors to the subsidy are LPG and kerosene, food and fertiliser, he said, adding that “the quantum of reduction will be significant in the subsidy bill in 2016-17… various measures have been announced and I am confident we will able to meet the fiscal deficit target of 3.5 per cent.”
Amid debate over balancing growth and fiscal prudence, Jaitley in his Budget decided to the keep the fiscal deficit target for 2016-17 at 3.5 per cent of GDP, in line with the revised fiscal consolidation road map.
The fiscal deficit for the current financial year has been maintained at 3.9 per cent, as was indicated in the budget estimates for 2015-16.
He also said in his Budget speech that a high-level committee will be set up to review the working of Fiscal Responsibility and Budget Management (FRBM).