Finance Minister Nirmala Sitharaman on Saturday reiterated that the government will take more steps to revive an ailing economy, while shying away from spelling out the timeline for the same.
“If I say yes, it will be when. If I say yes, it will come back to me that we are too close to the Budget. I don’t want to say yes, although I wish I could. At the same time, I will not say no cause we are working on more," she said.
The minister’s comments come at a time when India’s economy grew at 4.5% July-September quarter, the slowest since March, 2013, as manufacturing output contracted. Clamour for a stimulus arose after the gross domestic product (GDP) growth continued to decline for over a year, even as the government maintained that growth is expected to pick up from the third quarter. Though the Narendra Modi administration has taken series of steps measures, including a corporate tax cut, over the last four months to revive growth, the steps are yet to yield the desired results.
Speaking at the Hindustan Times Leadership Summit here in New Delhi, the finance minister said while some sectors have gained from key 32 measures taken by the government, some other sectors still need some help.
“My attention will be only on making sure more is done towards greater stimulus. If from that the message of bottoming out comes, then it is good, but I will not let that distract me," Sitharaman said.
She said that the public sector banks have disbursed close to ₹5 lakh crore in October-November to non-bank lenders, small and large businesses, among others, ensuring that money is reaching directly for consumption. The other way to put more money in the hands of people is through giving out subsidies via direct benefit transfer (DBT).
She also indicated that the government may soon relax the personal income tax burden in a bid to provide relief to individuals and boost consumption by putting more money in the hands of people.
“(A cut in personal income tax) One among the many things we are looking at," the minister said at the Hindustan Times Leadership Summit 2019 in the national capital. When asked how soon there will be a relief on personal income tax, the minister said “wait for the Budget". The Union Budget for fiscal 2020 will be presented in February.
The government is also working towards greater public expenditure as it can immediately have ripple effect in terms of jobs, local consumption, in terms of core sector’s revival.
“That is going on in a very big way… ₹100 lakh crore wll be invested in infrastructure in the next five years. The task force, which is looking into it has already listed some big ticket expenditure that the government has to undertake in terms of expenditure," she added.
“The focus is the larger picture, which may have abstract philosophical plus objectives which are stated as targets and the building blocks towards it and the way we are going to spend to ensure that happens. And eventually, if all this can trigger private investment, it will be greater synergy which will push the economy forward,".
The government is also taking baby steps towards creating a simplified taxation structure that will also ensure that assessees are not harassed. Sitharaman also said the government is striving for an exemption-free tax regime.
“We want to ensure that the entire tax structure is simplified. We want to remove the ifs and buts in the taxation structure in the long run," the minister said.
Sitharaman appealed to tax assessees to approach her office or the revenue secretary’s office in the finance ministry when facing harassment at the hands of tax officials.
“We have asked tax collection officers to not strain and put pressure on the assessees even if tax collection targets are not met," the minister said on the second day of the two-day leadership summit.
According to a PTI report, the Centre, as of middle of November, had mopped up ₹6 lakh crore in direct taxes which is less than 50% of the direct tax collection target of ₹13.35 lakh crore for the current fiscal.
Collections under the goods and services tax (GST) have also been largely weak, falling short of target, amid an economic slowdown.
An expectation of shortfall in revenue collection from direct and indirect taxes have also raised doubts on Centre’s ability to stick to a fiscal deficit target of 3.3% of GDP. The corporate tax rate cut will cost the government ₹1.45 lakh crore and is expected to widen fiscal deficit, ratings agencies and experts have said. A cut in personal income taxes would put more pressure on the government’s finances, especially as tax collections have remained tepid.
The Centre overshot its annual fiscal deficit target at 102.4% and exhausted 112.5% of the revenue deficit target during April-October.
Sitharaman said that the Centre has to obey the FRBM Act and confine to the fiscal deficit glidepath even though it is ‘strictly difficult’. Even though some economists, experts have suggest that the government must spend more and bypass the fiscal discipline she said that “it is all being discussed", adding that she may not be immediately comment on it.
In a relief of sorts, GST collections in November rose 6% year-on-year to ₹1.03 lakh crore, after falling for two straight months in September and October.
This was only the eighth time since the rollout of GST in July 2017, that monthly collection crossed the Rs1 trillion mark. GST collections in November were the third highest monthly collection since the rollout, next only to April 2019 and March 2019 collections.
The jump in GST collection in November was attributed to festival demand and anti-evasion measures such as restricting the use of tax credits where the seller failed to upload invoice.
Sitharaman also said the Centre will soon have a streamlined GST regime for all assessees.