Finance Minister Arun Jaitley said that despite subdued global economic
growth, India’s growth remains impressive and one of the best in the world
during the last three years. He said that India has recorded an average growth
of 7.5 per cent from 2014-15 to 2016-17, significantly higher as compared to
the growth in the previous two years.
The Finance Minister was making the Opening Remarks during his 5th
Pre-Budget Consultation Meeting with the leading Economists here in New Delhi on
December eleven. Mr.Jaitley said that the growth of Second Quarter of the
Current Financial Year 2017-18 marks the reversal of the declining trend of
growth witnessed in the last few quarters.
He said that we are following the roadmap of fiscal consolidation under
which the fiscal deficit as a ratio of GDP stood at 3.9 per cent in 2015-16 and
3.5 per cent in 2016-17 and is budgeted to be 3.2 per cent for the Current
Financial Year 2017-18.
The Finance Minister said that we have been able to achieve these fiscal
targets due to focus on expenditure rationalisation, plugging of loopholes in
public expenditure through Direct Benefit Transfer Scheme (DBT) and the Public
Financial Management System (PFMS), and by making innovative revenue raising
efforts among others.
Along with the Union Finance Minister
the Pre-Budget Consultative Meeting with the leading Economists was also
attended among others by Dr. Rajiv Kumar, Vice Chairman, NITI Ayog, Mr Bibek
Debroy, Member, Niti Ayog and Chairman, Economic Advisory Council to the Prime
Minister (EAC-PM), Dr. Hasmukh Adhia, Finance Secretary, Mr A.N. Jha,
Secretary, Expenditure, Mr Subhash Chandra Garg, Secretary (Economic Affairs),
Dr. Arvind Subramanian, Chief Economic Adviser (CEA), Mr Sushil Kumar Chandra,
Chairman, CBDT and other senior officers of the Ministry of Finance.
The Economists present during the aforesaid Meeting included Dr. Rathin
Roy, Director, NIFP, Mr.Sajid Chinoy, Chief India Economist, JP Morgan, Mr.
Jean Dreze, Delhi School of Economics, Mr. Josh Felman, Economist, Mr T.N.
Ninan, Chairman, Business Standard, Mr Surjit S. Bhalla MD, OXUS Investment, Mr
Ajit Ranade, Chief Economist, Aditya Birla Group, Mr Majoj Pant, Director,
IIFT, Dr. Arvind Virmani, President, Forum for Strategic Initiative (FSI), Shri
Himanshu, Associate Professor, CESP, JNU, Mr Shekhar Shah, Director General,
NCAER, Ms. Pranjul Bhandari, Chief India Economist, HSBC, Mr Sunil Jain,
Managing Editor, The Financial Express, Ms Rinku Murgal, Lead Economist, World
Bank, Mr. Partha Mukhopadhyay, Center for Policy Research and Mr. Rajat
Kathuria, Director and Chief Executive, ICRIER among others.
A number of suggestions were given by the participating Economists and
other economic experts. Some of the
major suggestions included that in the forthcoming Budget, the Government
should continue to follow the path of fiscal consolidation and in case, there
is any shortfall due to any reasons in achieving the fiscal targets, the same
thereof may be clarified.
The road map for Tax Reforms may also be announced. It was also suggested
that without compromising on macro-economic stability, more incentives be given
on infrastructure investment as well as to SME and Construction Sectors to make
them economically viable, give farmers more remunerative prices for their
produce keeping in view the target of maintain inflation between 4-6 per cent.
Another suggestion was to give more thrust on disinvestment of Public
Sector Units (PSUs) as it will provide extra revenue for bridging the fiscal
gap and meeting the expenditure needs. A suggestion was made to raise old age
pension from existing Rs.200 to Rs.500 and Widow Pension from Rs.300 to minimum
It was also suggested that Maternity Entitlement Benefits be fully
implemented and be extended up to two children. Besides, the payment system for
these Social Security Schemes also needs to be streamlined.
Another suggestion was made to lower the Corporate Tax up to 20 per cent by
removing all exemptions in order to make it competitive at international level.
It was also suggested to tax Long Term Capital Gains to bring equity and raise
revenue, reduce MAT (Minimum Alternate Tax), and announce the road map for GST
including convergence of rates, extending time for transactions’ matching etc.
It was also suggested to give incentives to labour intensive industries
including SMEs and informal and unorganised sectors. It was also suggested that the Tax
Administration need to be made more tax payers friendly. It was suggested that
Crop Insurance Scheme be relooked and be made more effective. It should cover
not only the crop failure but also the price failure.
It was suggested to issue long term New India Bonds to finance pension and
infrastructure. It was also suggested to set-up National Level Investment Promotion
Body to promote private investment through policy reforms and incentives. It
was also suggested to incentivize non-farming activities in the rural areas in
order to achieve the goal of doubling of farmers’ income by 2022. This will
also help in providing fruitful employment in rural areas besides raising the
income of the farmers.
It was also suggested to boost private and public investment in Defence
Sector as there is lot of potential in this regard. Another suggestion was to
increase wages under NREGA and take it to the level of minimum wages or even at
market rates. It was suggested to set-up a Committee to formulate Comprehensive
Strategy to suggest the Government what should be its strategy to take the
economy forward. It was also suggested to set-up a Commission to anticipate
skill requirements in 21st century and suggest appropriate action for skill
upgradation to meet the requirements of the industry and to achieve the best
possible demographic dividend.
Another suggestion was made to give more thrust to core Research and
Development(R&D), more outlay for Bank Recapitalisation, announcement of
Additional Recapitalisation Bonds for Public Sector Banks, implementation of
Insolvency and Bankruptcy Code and thereby allowing banks to take over the
assets from weaker promoters and hand-over the same to the strong promoters.
It was also suggested to bring more and more subsidies under Direct Benefit
Transfer Scheme to avoid pilferage, implement labour reforms and Government to
fund the promotion of digital payments. Another suggestion was to follow the
principal of maximising the revenue collections and not that of tax morality.
It was also suggested that we need real policy rates to revive economy.
It was also suggested that tax compliance can be increased by
rationalisation of taxes and cost of tax compliance may also be reduced. In
order to create more job opportunities, it was suggested to increase
manufacturing to GDP ratio to 25 per cent and incentives to SMEs among others.
It was also suggested to focus on social protection architecture in the coming
Budget especially in case of insurance and pension. Another suggestion was to
incentivise non-farm services in rural areas for increasing the farmers’