Factoring in uncertainties to revenue buoyancy in the first year of the GST regime, the government has kept the growth in the indirect tax receipts for FY18 at a modest 8.8%, compared with 20% in FY17, says finance secretary Ashok Lavasa.
Factoring in uncertainties to revenue buoyancy in the first year of the goods and services tax (GST) regime, the government has kept the growth in the indirect tax receipts for FY18 at a modest 8.8%, compared with 20% in FY17, finance secretary Ashok Lavasa tells FE’s Prasanta Sahu and Banikinkar Pattanayak. Edited excerpts from the interview:
GST implementation and the ambitious disinvestment target are seen as possible threats to fiscal consolidation in the next fiscal.
In fact, GST implementation is the reason why we have not projected a major increase in indirect tax receipts next year. The increase proposed is less than 9%. On disinvestment, a lot of groundwork has already taken place. Strategic disinvestment will take place while many PSUs will get listed next year. So I feel that the R72,500-crore target is achievable. This year’s disinvestment proceeds are at a record high R45,500 crore (according to the revised estimate).
What will happen to expenditure commitments if overall revenue mop-up doesn’t match with the Budget projections for 2017-18?
We should not look at that kind of a pattern for the simple reason that this year as well as last year, the trend of cutting expenditure has been reversed. There is an increase of almost R36,000 crore in the revised estimate of expenditure over the BE of FY17. So we do believe that the projections that we have made are reasonable.
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What is your view about the Economic Survey’s idea of the redeployment of Reserve Bank of India funds for setting up a public-sector bad bank?
The problem of NPA is serious. The bad bank or the so called Public Sector Asset Rehabilitation Agency (PARA) would work like an asset reconstruction company (ARC). So, before we look at a new ARC, it would be important to see why the existing ARCs are not able to perform. Funding question will arise only after a decision is taken to create the PARA.
Capital infusion of only R10,000 crore in public sector banks in FY18 is seen by rating agencies as a negative…
On the contrary, all the banking stocks have gone up after the Budget announcements. I think the amount which has been allocated is keeping in with the Mission Indradhanush scheme. If there is a case for further capital infusion, then we will review the situation.
How will you bring down the ratio of general debt to GDP to below 60%?
The FRBM Committee’s recommendations are still to being examined. But this is one of their recommendations. When we are keeping fiscal deficit under control, we are automatically aiming at keeping debt under control.
There was no mention of direct benefit transfer (DBT) in the Budget. Are you sticking to the plan to roll out DBT in all schemes by March 2018?
Already 84 schemes are on the DBT platform. If not all, a substantial number of schemes will be in DBT mode by FY18-end.
For a big project of this magnitude, reviews take place and we have to readjust our timelines sometimes. DBT in food and fertiliser will be extended to other areas only after we see the results of the ongoing pilot projects.
Has rising crude prices been factored in the Budget’s subsidy calculations?
There is a range within which we are comfortable. So we hope that crude prices will remain $65 to $70 per barrel.
How will the proposed R1-lakh-crore railway safety fund be financed in five years?
The Budget allocation is R15,000 crore and we have requested the railway ministry to set aside R5,000 crore from their internal resources for the safety fund in FY18. We have to see if the private sector and multilateral agencies could be possible sources of funding, going forward.
Do you see challenges to mobilising resources if the projected 11.75% nominal GDP growth does not materialise next year due to growing protectionism in developed nations and threats to exports?
When GDP and revenue growth forecasts are made, all the risk factors are taken into account. What is happening today is not something which has not happened in the past. To the extent exports get affected, it’s a matter of concern for the government.