New govt must focus on GST, fiscal deficit for growth: Montek
Rapid implementation of GST and reduction in fiscal deficit should be the thrust areas for the new government that will help the country achieve 7-7.5% growth, planning commission deputy chairman Montek Singh Ahluwalia said on Saturday.business Updated: May 10, 2014 19:21 IST
Rapid implementation of GST and reduction in fiscal deficit should be the thrust areas for the new government that will help the country achieve 7-7.5% growth, planning commission deputy chairman Montek Singh Ahluwalia said on Saturday.
"The first year of the new government will be its honeymoon period. And after a year, they will have to take the policy decisions. If they do the right thing, we will be back on the growth path. Though achieving 8% may be difficult, 7-7.5% is not," Ahluwalia told reporters on the sidelines of 'India Economic Outlook Conclave' in Mumbai.
"Though it is the sovereign decision of every government, my advice to the new government, and certainly to our present government, is that it is certainly a big mistake to take your eyes off the fiscal deficit. We have been reducing it and we should continue to do so," Ahluwalia said emphasising on the need to reduce the fiscal deficit.
He further said that though investments have reduced from 35% to 32%, even in that scenario the country will be able to achieve its targets.
Besides, he said, rapid implementation of goods and services tax (GST) is the systematic reform that can be brought by the new government.
"I think, in these areas, there has been narrowing of differences, but now we will have to see how the politics unwinds," he said.
Ahluwalia said the growth of the economy will also depend on the growth of the industry as a whole.
"There has been a slowdown in construction, mining and manufacturing sectors. The manufacturing sector has to grow double digit.
Also, the growth of the small and medium enterprises depends on the growth of the industry. If the industry does not grow, the SME sector, too, will not grow," he added.
He further said the new government should also lay thrust on the effective functioning of the two very important groups -- the Cabinet Committee on investment and the project monitoring group in the cabinet secretariat - which have already been set up and have been effective in implementation of various infrastructure projects.