India’s Finance Minister Nirmala Sitharaman stoutly defended her government’s efforts to bring in economic reforms and said these efforts will continue. She is currently in the US and her statements have come at an interaction she held at the Columbia University in New York. The FM said only the first half of the financial year has got over. The second half has just begun and depending on how the economy fares there will be more announcements coming through.
She however, allayed any fears of the fiscal deficit climbing back up due to the revenue cuts the government is taking by announcing concessions. The corporate tax rate cut is a case in point where the rough estimate is the revenue implication will be to the extent of ₹1,45,000 crore. Nirmala Sitharaman says she expects two developments to take place that will plug the revenue losses. One is the companies giving up on exemptions and increased compliance which will result in more tax collections. The other is the proposed disinvestment plans where the government plans to collect ₹1.05 lakh crore. Around 25 public sector undertakings have been taken up for disinvestment, including Air India. In many cases, government-owned entities like LIC of India have been asked to pick up the government holdings being divested.
On the status of the economy, the Finance Minister says the country’s economy has been affected due to several factors, like the trade wars that keep raging on, protectionism offered by some countries and the volatility in the crude oil prices and supplies. Despite these, the country’s economy has been marching on, albeit a bit slower than anticipated. These external disturbances have not deterred the government from going ahead with its reforms agenda.
The minister had earlier hinted while in India that the GST ecosystem may be reviewed and overhauled, though it requires the active participation of all states. She didn’t feel the scaling down of the growth projections for the year to 6.1% by the IMF recently would be a big issue. Even at that level, India would be one of the fastest growing economies in the world she said.
There is some reservation among a section of experts if the country can manage to stick to the fiscal deficit target of 3.3% despite all the news of slowing down of growth and revenue collections falling.
Nirmala Sitharaman sounded confident that the target of taking India to the level of a $5 trillion economy by the year 2024, is very much achievable. Answering some questions, the Finance Minister said she was confident that though delayed, the Indo-US trade deal will be signed sooner than later.