The government has realised its fiscal deficit targets and is on course to achieve it for the current year, Finance Minister Arun Jaitley said at a pre-budget consultation meet in New Delhi, even as economists present at the meeting suggested lowering of the country’s corporate tax rates.
Jaitley said the government had met its fiscal targets by rationalising expenditure and plugging leakages, according to a Finance Ministry release.
The Pre-Budget Activity
“We have been able to achieve these fiscal targets due to focus on expenditure rationalisation, plugging of loopholes in public expenditure through the Direct Benefit Transfer (DBT) scheme and the Public Financial Management System, as well as by making innovative revenue raising efforts,” he said, as per the statement.
The fiscal deficit as a ratio of GDP stood at 3.9 percent in 2015-16, 3.5 percent in 2016-17, and is budgeted to be 3.2 percent for the current fiscal ending March.
“A suggestion was made to lower corporate tax up to 20 percent by removing all exemptions in order to make it competitive at the international level,” the statement said.
“Another suggestion was to give more thrust on disinvestment of public sector units,” it said.
The economists also suggested taxing long-term capital gains to raise revenue, reducing Minimum Alternate Tax (MAT), and announce the road map for GST, including for convergence of indirect tax rates. They also recommended giving incentives to labour-intensive industries and to the informal and unorganised sectors.
“Tax administration needs to be made more tax payer-friendly,” the statement cited the economists as saying.
Officials at the meeting included Vice-Chairman NITI Aayog Rajiv Kumar, Prime Minister’s Chairman Economic Advisory Council Bibek Debroy, Chief Economic Adviser Arvind Subramanian, Finance Secretary Hasmukh Adhia, Expenditure Secretary A.N. Jha, Economic Affairs Secretary Subhash Garg and Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra.
Economists present at the meeting included NIFP Director Rathin Roy, JP Morgan Chief India Economist Sajid Chinoy, Delhi School of Economics Professor Jean Dreze, Business Standard Chairman T.N. Ninan, OXUS Investment MD Surjit Bhalla and Indian Institute of Foreign Trade Director Manoj Pant.