FINANCE minister Arun Jaitley on Saturday agreed to consider the states’ demand for some flexibility in their Fiscal Responsibility and Budget Management Act obligations in the near term, given the concerns over their tax revenues coming under pressure due to the withdrawal of high-value bank notes from circulation, reports fe Bureau in New Delhi. Jaitley discussed this with state FMs on the sidelines of the GST Council meeting. Briefing the media, Jaitley said states asked for some leeway in their fiscal obligations, adding these would be discussed further.
West Bengal finance minister Amit Mitra said the threat to states’ revenue from demonetisation was huge.
He apprehended that GDP growth might even slip into negative territory for the current quarter (although demonetisation may have had a significant impact on GDP, available data including the November purchasing manager’s index doesn’t corroborate such alarmist outlook).
Separately, the FM said one cannot convert black money into white by merely depositing unaccounted cash in bank accounts as taxes are required to be paid on them. He added that the income tax department is keeping an eye on such deposits.