Press Trust of India
New Delhi, Oct 5: The government Monday admitted that the tax collection may fall short of target by 5-7 per cent, but expressed confidence that the economy will clock over 7.5 per cent growth this year without hurting the fiscal deficit road map. Addressing a press conference on completion of first half of the current fiscal, Finance Secretary Ratan Watal said the government will continue with the reforms agenda to achieve the potential growth of 8 per cent plus over time.
“Our macro-fundamentals remain strong. We are now better placed to handle unforeseen external shocks and put India firmly on the path of economic recovery and inclusive prosperity,” he said at a media interaction during which other secretaries and the Chief Economic Advisor were present. The twin deficits – fiscal and current account – have been reduced, he said, adding that “the government is committed to achieving this year’s fiscal deficit target as well as the fiscal glide path laid out in the Budget”. He further said the government is trying hard to sort out legacy issues of tax demands “raised retrospectively through mutually beneficial solutions”. One of the concerns is revenue collections, which according to Revenue Secretary Hasmukh Adhia will fall short of the budgetary target by 5-7 per cent, mainly because of subdued growth in direct taxes.
The total tax revenues are likely to be around Rs 14 lakh crore in the current fiscal, as against the Budget estimate of Rs 14.5 lakh crore. On growth, Economic Affairs Secretary Shaktikanta Das said there are indications that it will exceed 7.5 per cent in the current financial year. “Despite the global slowdown and declining export demand, India has emerged as the fastest growing major economy in the world,” he said. On discom debt recast, Watal said the government is working on it. “We are working very closely with the Power Ministry and also the affected eight stressed states,” he said, adding that a lot of progress has been made in the power sector over the last one-and-a-half years and mainly, the financial health of discoms has received the highest attention of the government. He also said the government will soon decide the structure of the Monetary Policy Committee (MPC), which will fix the benchmark interest rate of RBI and set inflation targets, said Das. Besides, he said the government will firm up its plan for setting up a non-statutory public debt management agency (PDMA) in the next fortnight. With regard to small savings, Das said the interest of small savers, especially of senior citizens and girl child, will be kept in mind while reviewing the deposit rates for schemes in light of falling bank interest rates.
“The interest of small savers, the interest of senior citizens, interest of girl child scheme, all these aspects will be taken into account. The social security component of small savings schemes is very important and the government will keep that in mind,” he said. Observing that the revenue collection target for the current fiscal was 16.5 per cent as against 9.9 per cent in the previous fiscal, Adhia said, “In a way, the target looks to be ambitious, but the revenue position so far has been very very satisfactory.” Direct tax collection during April-September registered an increase of 12 per cent, he said.
On indirect taxes, the growth during April-August worked out to 36.5 per cent. It will be 12.2 per cent after excluding the additional revenue measures by the government during the year. The growth of 36.5 per cent in indirect taxes is “quite satisfactory”, Adhia said, adding that there is “likely to be some shortfall in direct taxes when we end the year, but some part of it will be made good by indirect taxes because of the additional resource mobilisation measures”.
