With less than one and a half months left for the Union Budget to be presented, finance minister Arun Jaitley on Monday said that the government...
With less than one and a half months left for the Union Budget to be presented, finance minister Arun Jaitley on Monday said that the government is working on rationalisation of the tax structure and is also making attempts to make budgetary proposals more transparent to ensure there is no more “concealed” fiscal deficit. The government is looking at the interim report submitted by an expenditure commission to initiate measures on rationalisation of subsidies, Jaitley said, adding that “special steps” will be taken to boost public spending on infrastructure.
In his first interactive session with the members of CII here, Jaitley said: “We are looking at rationalising subsidies as recommended in the interim report submitted by an expenditure commission, including on oil and fertiliser fronts… Public spending on core areas and abolition of certain centrally sponsored schemes are among other things (on the agenda).” He noted that the linking of LPG subsidy through banks has been effective January 1.
“The government is working on transparent budgetary proposals and we have no idea on presenting any concealed fiscal deficit,” he said. The remark is in the context of the practice of rolling over substantial parts of committed oil, fertiliser and food subsidy payments in recent years by the UPA government.
According to Jaitley, the current public-private partnership model is not serving the purpose. “We need to revive this and we are working on the same. The Union government sees both opportunities and challenges, given the current fiscal deficit constraint. We are taking steps to see that investments not only pour from foreign, private but also from public. In the coming months the focus will be on more investments, manufacturing and infrastructure,” he added.
Except the US, competing economies, particularly China, are not doing better than India, he noted. India holds great opportunity and is moving faster than them as shown by global data as well as a change in the general mood in the country, he said. The government’s agenda too has changed with the focus on a strong revival in economy, he added.
On the goods and services tax, the finance minister said: “We have received an encouraging response from most of the states. We will assure the states by providing enough cushion to see that they do not loose a single rupee. A few manufacturing states have raised a strong doubt that they won’t get their share but we assure them that they will get their due shares. First five years, the Centre will support all the states. Moreover, the Rs 2 lakh crore being collected through service tax is also including states’ share. Longer the GST, lower the tax,” Jaitley said.
By cutting down the number of centrally sponsored schemes, states have more money in their hands to design and spend their own welfare schemes, he said. All major political parties should have a national vision on economic policies as they have in relation with security and foreign policies. Those parties that come to power both at the central and state levels should have a common vision, he pointed out.
Referring to the government’s decision to take the ordinance route on some legislations,Jaitley said it was a forced one as the wisdom of the duly elected House (Lok Sabha) was being constantly questioned by the indirectly elected House (Rajya Sabha). “If one House is not allowed to function, that doesn’t mean the country will stop functioning,” he added.
On the criticism of allowing foreign direct investment (FDI) in defence manufacturing, Jaitley questioned the logic of buying nearly 70% of the defence needs from overseas while opposing domestic manufacturing with minority foreign stake. “A new sector of manufacturing (defence equipments) has opened up,” he said.
On housing and road infrastructure spending, Jaitley said, “We are looking at improving tier-II and III cities with necessary road infrastructure and industrial corridors so that farmers can benefit. The government is also fully committed to develop affordable housing and is working at reviving both these sectors in a big way.”
Responding to questions on the new company law, the minister said: “It is not easy to amend an Act. Over 500 sections need to be amended.
We are issuing notifications wherever possible. There are 15 such provisions where the government can’t even issue notifications. There is not even a single chamber that collectively came together to suggest something concrete. Every chamber came out with their respective agenda/complaints.”
“Some chambers were seeking the Bill to be passed. Some industry chambers supported a new Companies Act brought by the previous UPA government though it had incorporated some of the provisions from anti-terrorism and narcotics laws. The previous companies law unduly favoured minority shareholders. The basis of company law in India is corporate democracy. Rule by minority is completely to the contrary,” he added.