HTLS 2017: Arun Jaitley says spending on infrastructure, rural sectors to be focus areas in Union Budget
The Union budget for 2018-19 will focus on infrastructure, rural spending and small and medium enterprises for higher growth and job creation, finance minister Arun Jaitley said on Thursday.
Jaitley will present the Union budget on February 1, which will be the last full budget of the NDA government ahead of the general elections in 2019.
Speaking at the HT Leadership Summit, Jaitley said there have been tectonic changes in the economy in the past one year and the government will now focus on infrastructure and rural sector in the budget.
“Now is the time really to concentrate. And the two areas to be concentrated on are infrastructure and rural India. I do expect that whatever the additional resources we have, a lot is going to be spent in these areas,” he said.
Besides small and medium industries, essentially the manufacturing sector, Jaitley said the government will also focus on the informal sector for higher job creation.
Jaitley will start holding pre-budget consultations with different stakeholders starting December 5.
His first meeting will be with representatives of agriculture groups followed by one with representatives of trade unions, the finance ministry said in a statement.
This will also be the first budget after the Goods and Services Tax (GST) was implemented from July 1. The Centre now cannot on its own change the indirect tax structure, except for customs duties, as this would need approval of the GST Council. This may substantially shift the focus of the next budget to quality of government expenditure.
Jaitley had earlier said he will stick to the glide path for fiscal deficit announced in the last budget, ruling out a breach of the self-imposed fiscal discipline target to boost economic growth.
The government aims to contain the fiscal deficit at 3.2% of GDP in 2017-18 and 3% of GDP in 2018-19. However, given the expected revenue shortfall and additional burden due to public sector bank recapitalisation, the government is expected to revise its fiscal consolidation roadmap.
The ministry recently asked the 15th Finance Commission to recommend a fiscal consolidation roadmap for both the Centre and states, indicating that it may defer implementation of the NK Singh committee report by two years.
On the panel’s recommendations on creating a fiscal council, Jaitley said this needs to be further debated as to whether more power should be vested in non-elected institutions.
Asked whether India can achieve double-digit growth, Jaitley said it is challenging as it will not depend merely on domestic factors. “It will also depend on how the world is moving. We managed a 7%-8% growth rate at a time the world was moving slowly. We effectively used that period to bring a series of structural changes in the economy,” Jaitley said, hours before release of the third quarter GDP numbers that showed a growth of 6.3% after slowing down to a three-year low at 5.7% in the June quarter.
“Structural reforms have their own short-term impacts and then you pick up again. Certainly it will help us in the short to medium term to help expedite growth itself. But I am realistic that to reach a double-digit growth you need to have a kind of boom period that you had between 2003 and 2008,” he added.