Budget 2019

Govt, in order to promote economy, must promote investment private consumer demand: C Rangarajan

Our Bureau Chennai | Updated on July 06, 2019 Published on July 06, 2019

File photo of former Governor of the Reserve Bank of India, C Rangarajan   -  The Hindu

According to budget estimates, within non-tax revenues, dividends and profits is expected to grow at 37 per cent growth in FY2019-20.

The government of India is excessively reliant on non-tax revenue sources for mopping up its income and consequently have projected a very high level of profit for the RBI in its budget estimates, said C Rangarajan, Former Governor of the Reserve Bank of India.

He was delivering the inaugural address at an interactive session titled ‘Analysis of the Union Budget Proposals 2019-20,’ organised by The Southern India Chamber of Commerce & Industry, Chennai (SICCI) here on Saturday.

“According to budget estimates, the Gross tax revenue is expected to grow at 9.5%, which certainly isn’t high. But the non-tax revenue is expected to grow at 27.7% and the reliance on non-tax source is certainly high,” Rangarajan said.

According to budget estimates, within non-tax revenues, dividends and profits is expected to grow at 37 per cent growth in FY2019-20.

“The government should be willing to adjust expenditures, if the revenues don’t grow at the desired rate,” he added.

Rangarajan, who was also a former Economic Advisor to the Prime Minister of India, said the fiscal deficit target can be met only if the revenue projections are ‘credible’ and the revenue projection in turn depends on the income growth during the budget period.

Lauding the government for its commitment to contain the fiscal deficit at 3.3 per cent of GDP, the former RBI governor said that the country does not need only a high rate of economic growth but also sustained growth with stability.

“I am one of those who strongly believe that we need a fiscal room just like how we need a monetary room, to keep the governments on a steady path,” Rangarajan added.

Recalling India’s response to the global financial crisis of 2008-09, Rangarajan said that India’s fiscal deficit to GDP during the crisis rose to 6 per cent as against the mandated level of 3 per cent, resulting in high level of inflation consequent to the crisis.

On the expenditure outlay, Rangarajan said that the Finance Minister had spent a considerable time in announcing various schemes but the concern will be on how well they are implemented at the ground level and how does it benefit the stakeholders.

In his concluding remarks, he said that the government, in order to promote the economy, must promote investment as well as private consumer demand.

“I don’t see any direct or immediate measure in the budget that will induce private investment,” Rangarajan said and added that probably all other measures announced in the budget can create a favourable investment sentiment for the private sector.

Published on July 06, 2019
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