Finance minister Arun Jaitley said on Thursday that the NDA will stick to fiscal discipline and trim tax rates if re-elected. He asserted that the GST Council will next look at lowering the rate on cement from the highest slab of 28%.
“In the last 20-odd months of the GST on (except for cement)… every item of consumption has come down to 18% and 12% category from 28%. So, it is only a matter of time that the last one also comes down,” Jaitley said while addressing the CII’s annual general meeting.
The Centre’s fiscal deficit is estimated at 3.4% of the GDP in FY19 and FY20, worse than the initial targets of 3.3% and 3.1%, respectively, mainly due to the introduction of the PM-Kisan scheme, under which the government promises an annual `6,000 cash support to small and marginal farmers. However, during the current NDA regime, fiscal deficit dropped from 4.5% in FY14 to 3.4% in FY19.
The fiscal deficit had touched as much as 6.2% in 2009-10 when the UPA was in power.
“I’m quite clear in my mind that on two issues: (we adopted) fiscal prudence and we brought the (GST) rates down, these are two areas, if
we are in power we will continue the same glide path,” Jaitley said.
As for tax relief, at the time of the GST rollout in July 2017, there were 230 items in the 28% slab. But by early 2019, the council had pruned the list to only 28 items, including luxury and sin goods such as tobacco and cars.
However, cement continues to be in the highest slab despite being a mass-consumption item because of revenue implication of any rate cut. The finance ministry has estimated a revenue loss of `14,000 crore annually if the rate is trimmed to 18%. This could weigh on the Centre’s GST mop-up, which was, in any case, `60,000 crore lower in FY19 even from the revised estimate.
Jaitley said India’s growth has stabilised between 7% and 7.5% and domestic consumption is going to rise irrespective of global trends.
“We have come to 7-7.5% (growth rate) range despite the fact that there is no global boom or support of any kind, and we have stabilised at that, you need to graduate further,” the finance minister said.
The Reserve Bank of India Thursday cut its GDP growth forecast for the current fiscal by 20 basis points to 7.2%.