Finance minister Arun Jaitley said on Friday that he is not worried about achieving the fiscal deficit target, saying his government will be able to maintain the current year’s target at the Hindustan Time Leadership Summit in New Delhi.
Speaking on the topic ‘From being influenced by the global economy to influencing it: Can the Indian economy step up to it’, Jaitley said, “I am not particularly worried about fiscal deficit target but concerned about quality. We will be able to maintain the current year’s target”.
“The pressure on the fiscal deficit on account of 7th Pay Commission will remain for two-three years... The government has to look at cutting small savings rate with political pragmatism and we have to move in that direction cautiously.”
When asked whether the government is the government left-wing or right-wing in it’s economic policy formations, Jaitley said, “The Indian model is a lot more market centric, growth-centric, and encourages private sector activity. I don’t think it’s possible now to classify government programmes into conditional ideological brackets.”
Jaitley also defended the government which started imposing 0.5% cess on all taxable services including air travel, telephony, eating out and banking to fund the Swachh Bharat Mission from November 15 this year saying it is needed to sustain and maintain the toilets which were built last year.
“If the government and industry have to support night soil carriers, we need revenues. Hence Swachh Bharat cess,” he said.
In his budget speech in February, Jaitley had proposed an enabling provision to levy the cess at a rate of 2% or less on all or certain services, if the need arose. This had come along with the increase in the service tax rate from 12.36% plus education cess to 14%.
Echoing Prime Minister Narendra Modi’s views on subsidies, the finance minister said that one of the unsung reforms in the last few months is rationalisation of subsidies done by the present government.
“Money saved from various sources goes to infrastructure sectors like highways and rural roads and railways,” Jaitley said.
Following Prime Minister Narendra Modi’s agenda of economic reform, Jaitley has adopted a consensual approach in his endeavour to steer Asia’s third-largest economy back on a high-growth trajectory.
There are some bright spots already with India’s economy expanding 7.4% annually in the July-September quarter - outpacing China. Jaitley has said he hoped growth would exceed 7.3% in the fiscal year to March, and could reach rates of 8-10%.
The government, however, has faced a relentless onslaught from the Congress party which has prevented the passage of the goods and services tax (GST) bill - the most ambitious tax reform since Independence.
Apart from the GST bill, the government is eager to push ahead reforms to bankruptcy law, changes to foreign direct investment (FDI) rules and a faster disputes resolution mechanism for public contracts in the winter session of Parliament. It has already eased FDI rules for 15 sectors.
Jaitley is one of the leaders to come together to talk about how India can become the world’s bright spot at this year’s two-day Hindustan Time Leadership Summit. Politicians and political thinkers, cricketers and actors, doctors and expert on spiritualism will put their minds together in bringing out the best that India can do.
On Day 1, Uttar Pradesh chief minister Akhilesh Yadav, minister for human resource development Smriti Irani, members of Parliament Jyotiraditya Scindia, Sitaram Yechury, Jay Panda and Supriya Sule will also represent the political side of the spectrum.