Finance Minister Arun Jaitley today said a "realistic" fiscal deficit target of 3.2 per cent of GDP has been fixed for 2017-18 and 3 per cent for the next year that could be achieved on account of higher tax revenues and disinvestment proceeds.
Finance Minister Arun Jaitley today said a “realistic” fiscal deficit target of 3.2 per cent of GDP has been fixed for 2017-18 and 3 per cent for the next year that could be achieved on account of higher tax revenues and disinvestment proceeds.
He said the Budget for 2017-18 does not factor in the full gains accruing from the high-value currency demonetisation in form of higher taxes on undisclosed income.
“As far as demonetisation is concerned, we will bear in mind that whatever is the revenue and other gains of it, they have not been fully factored. As against the 17 per cent growth in (tax) revenue in the last two years, we have actually put it at 12 per cent this year. A target which we could surpass.
“This year our collections are higher than what we had anticipated and hopefully we will maintain that course even next year,” he said at a post-Budget meet organised by industry chambers.
Encouraged by buoyancy in tax revenues, the government has set a “realistic target” of 3.2 per cent fiscal deficit in 2017-18 against 3.5 per cent in the current year, he said, adding that a roadmap to take it to 3 per cent in 2018-19 has been planned.
“We have a much higher target for disinvestment. Eventually, more and more PSUs including general insurance companies will be listed and as per listing requirements, we are required to divest a part of their equity as well,” he said while anticipating that such listings would give the government revenues.
The Finance Minister also said the time has now come to abolish the Foreign Investment Promotion Board (FIBP) to cut red-tapism.
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This is because “90 per cent of the FDI comes through automatic route. During the course of the year, we will bring out the entire roadmap for the abolition of FIPB, we intend listing of several PSUs to make them more competitive and transparent,” he added.
On the suggestion of Economic Survey on creating a state-owned asset reconstruction company – Public Sector Asset Rehabilitation Agency (PARA) – to address the festering Twin Balance Sheet (TBS) problem, Jaitley said such ideas are there for discussion and eventual implementation.
“The Economic Survey always carries ideas for discussion and eventually implementation even if you cannot do it immediately. And we take that suggestion on board,” he said.
With festering bad loan problem taking a heavy toll on the health of public sector banks, the Survey suggested creation of a PARA entrusted with working out the largest and most complex cases loan resolution.
“Even otherwise the whole suggestion that has moved in of the bad bank, even earlier, we take this suggestion on board for consideration. But, eventually what emerges out as a solution I won’t be able to comment at this stage,” he said.
Finance Minister said he would not like to get into a situation where eventually it becomes a government issue and the whole thing had to be supported out of the budget and not otherwise.
“Let that sectoral activity, which has expanded, move on…we take that suggestion on board, it’s also a possible solution,” he added.