Union Budget 2018 a blend of fiscal prudence and economic needs: Jaitley
Arun Jaitley in his budget speech announced a relaxation in his fiscal consolidation roadmap saying fiscal deficit would be 3.5% as against 3.2% targeted earlier.india Updated: Feb 01, 2018 19:20 IST
Finance minister Arun Jaitley on Thursday defended his 2018-19 Budget loaded in favour of rural and agri economy and doing little for the middle class, saying it is a blend of fiscal prudence with the requirement and needs of the economy.
He said since the revenue collection from Goods and Services Tax (GST) comes with a lag of one month, hence the government has to do with GST collections only till February. March revenues under GST will come only in April.
“This budget blends fiscal prudence with the requirement and needs of the economy today. We had initially targeted 3.2 per cent fiscal deficit for this year. In the past few years we have regularly tried to maintain those targets. This year there were series of circumstances. One obviously was the fact that we were getting GST revenue one month less this year,” Jaitley told reporters at a post budget briefing.
The minister in his budget speech announced a relaxation in his fiscal consolidation roadmap saying fiscal deficit, which is the gap between government revenue and expenditure, would be 3.5% as against 3.2% targeted earlier.
Jaitley said structural reforms undertaken by the government had their own impact, which varied from spectrum auction to dividend payment by RBI and CPSEs.
“We covered up a lot through direct tax revenues, we also covered up through some extra disinvestment but there is a small gap which is left behind. But the predominant part really is the 11-month revenue (from indirect taxes because of GST),” he said.
Justifying introduction of a 10 per cent tax on long term capital gains of above Rs 1 lakh made on sale of shares, Jaitley said the time was “opportune” to impose the levy as the markets have strengthened over the period of time.
He said in the last fiscal Rs 3.67 lakh crore long term capital gain income availed by large corporate groups, both foreign and domestic, was exempt from tax.
“The society needs funds... Since we didn’t want that tax to be retrospective, so we have grandfathered all investments till Jan 31, 2018,” he said.
Jaitley said with the various announcements, “we will be able to have additional resource collected which will help us maintain this blend between fiscal prudence and requirement of expenditure”.