Macro Economy

Centre may stick to deficit targets for 2016-17: Jaitley

Our Bureau New Delhi | Updated on January 22, 2018 Published on December 30, 2015

jaitley

To sacrifice deficit targets for growth is CEA’s view, says Finance Minister

Finance Minister Arun Jaitley has indicated that the Centre is yet to take a call on deferring fiscal consolidation goals to spur growth in 2016-17, as proposed in the Mid-Year Economic Review.

“The Chief Economic Advisor is entitled as a domain expert to loud thinking….to sacrifice fiscal deficit targets for growth is his view,” he told reporters here on Wednesday.

Chief Economic Advisor Arvind Subramanian, in the Mid-Year Economic Review, had suggested that the Centre should consider accelerating public investments to bolster growth, given the weak private investment.

The Centre aims to lower the fiscal deficit from 3.9 per cent of the GDP in 2015-16 to 3.5 per cent in 2016-17. But questions have arisen over the targets due to additional payments on implementing the Seventh Pay Commission recommendations and One Rank One Pension.

Jaitley said cheap oil prices have proved to be a “silver lining” this fiscal that enabled the Centre to fund public investments, but underlined the slowing global economy and low private investment as challenges for the next year.

He was, however, more optimistic about 2016 and expressed hope of the roll out of the Goods and Services Tax as well as higher economic growth.

Noting that India has never had three consecutive years of bad monsoons, he further said, “If monsoons are good next year, it will give us the cutting edge (for growth).” The positive data for industrial production also augurs well, he said.

Looking back on the calendar year 2015, the Finance Minister said, “Globally, we have been able to restore the credibility of our economic decision-making,” while describing the government measures to boost growth as a “struggle in adversity” due to low private sector performance, poor agriculture and the global economic slowdown.

Earlier in the day, Congress leader Anand Sharma had attacked the Narendra Modi government and said it had been unable to revive the economy.

Goods and Services Tax

Hitting out at the Congress, which opposed the Constitutional Amendment Bill for GST, Jaitley said a part of its obstructionism was intended to stop growth.

“The Congress has said even the trinity of Gods cannot make GST happen any time soon. Gods don’t vote in Parliament, MPs do, and the shrinking strength of Congress in Parliament can make it happen,” he said, stressing that States are on board and the indirect tax regime can be rolled out even in the middle of a year.

Seventh Pay Commission

Despite concerns over the fiscal impact on the exchequer, the Finance Minister seemed in favour of higher salaries and wages to government employees, as recommended by the Seventh Pay Commission.

“I never grudge government employees or workmen in the industrial sector to get high wages…especially at today’s cost of living,” he said.

Published on December 30, 2015
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