With the mantra of “Reform to Transform India”, the Indian government has embarked on a path of far reaching structural reforms to foster strong and sustainable growth, Finance Minister Arun Jaitley told the IMF today.
“The present government is following the approach of ‘Reform to Transform India’ through far reaching structural reforms to foster strong and sustainable growth,” Jaitley said in his address to the annual Spring Meeting of the International Monetary Fund (IMF).
Measures, inter alia, to enhance infrastructure investment, incorporation of bankruptcy law, improving business climate and significant tax reforms such as GST are being pushed forward, he said.
Arun Jaitley, who is here on a week-long visit to the US, said the Indian government is taking steps to reform institutions, simplify procedures and repeal obsolete laws.
“A progressive and non-adversarial tax regime incorporating best international practices is being put in place,” he said, giving a brief presentation on the key steps being taken by the Indian government to improve the country’s economy.
At the same time, novel welfare and social security schemes have been implemented to improve social outcomes, he said.
A new crop insurance scheme with attractive premium charge has been launched to protect farmers from income losses due to crop failures. The scheme protects farmers from losses due to crop failures, Jaitley stated.
Further, the government is leveraging digital technology to ensure that all eligible persons are included under the direct benefit transfer programme.
Accordingly, the AADHAAR (unique identification) system with statutory backing will form the backbone for targeted delivery of financial and other subsidies, benefits and services, he said.
In his address, Jaitley said India’s balanced macroeconomic environment and strong growth prospects make it a ‘bright’ spot in the global scenario.
According to advanced estimates, GDP growth in 2015-16 is likely to attain level of 7.6 per cent, higher than 7.2 per cent in 2014-15.
“Quarterly growth rates during the first three quarters of 2015-16 have showed consistently strong traction, with the 3rd quarter registering a growth of 7.3 per cent as compared with 6.5 per cent in the same quarter in 2014-15,” Jaitley said.
“The growth performance is more credible given that it has been achieved despite contraction in our exports due to slowdown in global economy and two consecutive years of monsoon shortfall,” the Finance Minister said.
The Gross Fiscal Deficit (GFD) of the central government at 3.9 per cent in 2015-16 was met by recovering higher tax and non-tax revenues without reducing planned spending or reducing allocation for pro-poor schemes, thereby underpinning the quality of fiscal consolidation, he said.
Despite the additional burden of pay and pensions on account of 7th central pay commission and defence pensions, the government is aiming to attain GFD target of 3.5 per cent in 2016-17 as per the medium term fiscal framework, Jaitley said.
He said the focus of the government will be on expenditure prioritisation particularly in the farm and rural sector, the social sector, infrastructure and recapitalisation of banks.
Fiscal policy has to play a vital role in sustaining overall growth in the uncertain global environment, Jaitley said.
With gains from low commodity prices, mainly oil, the current account deficit (CAD) was contained at 1.3 per cent of GDP in 2014-15 and is projected to remain stable 1.4 per cent by end of 2015-16, he said.
“However, there are concerns about export growth which is declining consecutively for more than a year due to slowdown in global demand,” Jaitley added.