The government's subsidy bill towards oil, fertilisers runs into lakhs of crores of rupees.
Ahead of the 2015-16 Budget, Finance Minister Arun Jaitley today said there was a need to rationalise all subsidies and ensure stability in policies to attract investment and drive growth.
“From January 1, LPG subsidy is going though banks… We have to gradually rationalise all possible subsidies,” the Minister said while addressing a CII function here.
The government is expected to incorporate the suggestions of the Expenditure Finance Commission headed by former RBI Governor Bimal Jalan in the budget proposals for 2015-16. Jalan is reported to have submitted interim recommendations to the Finance Ministry suggesting various steps to rationalise subsidies and public expenditure.
The government’s subsidy bill towards oil, fertilisers runs into lakhs of crores of rupees.
The Minister also underline the need for stability in tax and other policies to make India an attractive place for investment. The implementation of the Goods and Services Tax (GST), he added, will help in improving the business climate in the country.
The GST, the Minister said, was welcomed by different states and that “none of them will lose a single rupee” following the implementation of the new indirect tax regime.
Referring to the proposed changes in land acquisition laws, Jaitley said that it would eventually help farmers to get better price for their land.
Moreover, he added, establishment of rural infrastructure and industrial corridors would increase the price of land and generate employment for rural youth.
Jaitley said setting up of NITI Aayog will enable states to play a bigger role in the development on the country.
“All Chief Ministers are going to be part of General council. The number of central schemes are intended to be cut down so that more money is available to the states and they can design their own schemes. I am just outlining some of the steps.”
“All these steps have changed the domestic mood and the global attitude towards India,” he added.
The Finance Minister observed that with inflation broadly under control, oil prices down and food inflation under control, the process of rate cut has started.
“I see it as beginning of process and therefore in times to come it will give a further boost. The competitive economies are not better placed than us. We are moving much faster than them. So this year is going to be much better than last year, though not a great year,” Jaitley said.
However, he said “..in the years to come, we have to move to a much better levels of growth”.
The emphasis of the Modi-led government is going to be on “far more investments both in domestic and international”, the Minister said adding the focus must be on manufacturing and infrastructure.
“The public spending on infrastructure itself will have to be increased. We just mentioned that the whole PPP model is still under stress till we revive this. This is a course we are on and hopefully, with clarity in governance we are able to proceed in this course,” Jaitley added.