Business
Will Jaitley pursue 'big bang' reforms that Economic Survey desires? (Curtain Raiser)
With the Economic Survey
suggesting "big Bang" reforms, expectations run high on the national
budget due Saturday, in an exercise being regarded as a test-case for
Prime Minister Narendra Modi government's earnestness to provide
policies for "double-digit growth".
"As the new government is to
present its first full year budget, it appears India has reached a sweet
spot and that there is a scope for big bang reforms now," the survey,
tabled by Finance Minister Arun Jaitley said, setting, in a way, the
agenda for this annual exercise.
This will be Jaitley's second
annual budget, with the first one coming in the middle of the year after
a major victory in the national elections for the Bharatiya Janata
Party (BJP). In a way, the finance minister then had himself raised
expectations from his second budget due Saturday.
"The steps that
I will announce in this budget are only the beginning of a journey
towards a sustained growth of 7-8 percent or above within the next 3-4
years along with macro-economic stabilisation," Jaitley had said in his
budget speech delivered July 10.
"Therefore, it would not be wise
to expect everything that can be done or must be done to be in the
first budget presented within forty-five days of the formation of this
government," he said, alluding that he intended to undertake a more
comprehensive exercise in the upcoming budget.
Like in the past,
the finance ministry has been bombarded with suggestions and
expectations from a cross-section of stakeholders, from the corporate
sector to individual tax payers, on topics ranging from fiscal
discipline and subsidy cuts to concessions in direct and indirect taxes.
To
begin with, attention will focus on whether Jaitley has managed to keep
the fiscal deficit at the budgeted 4.1 percent of GDP which he had
termed as a difficult target set by his predecesor. He will also be
gauged on how much further he intends to bring the deficit down - and
how.
The minister will also have his task cut out by the
additional burden imposed by the 14th Finance Commission in terms of a
10-percent hike in the states' share of central taxes, the highest since
1978. This means a whopping Rs.348,000 crore payout in 2014-15 and
Rs.526,000 crore in 2015-16.
The government's annual report card
on the economy, released on the eve of the union budget, said growth
rate of over 8 percent is expected in the coming year, and that it can
even rise to double-digit levels with the right policy push and reforms.
Indicating towards Saturday's budget, the Survey said the
country can balance short-term boosting of public investment for
economic growth along with "fiscal discipline".
Over the
medium-term, India must adhere to the medium-term fiscal deficit target
of 3 percent of gross domestic product (GDP), the Survey said.
Major
legislation to effect various pieces of reform tabled by the NDA
government in parliament in the ongoing budget session include the
contentious ones amending the land acquisition act and for raising the
foreign equity limit in the insurance sector.