Mid-term assessment by top finance babus
New Delhi : The top babus whose writ runs large in the finance ministry have come out with some candid confessions about the state of the economy in a mid-term assessment for the 2015-16 fiscal.
Their verdict-the fiscal consolidation target mentioned in this year’s budget would be met, the GDP growth would be lower than predicted one, and the revenue collection targets would be falling short by five to seven percent.
For nearly 90 minutes three secretaries- Ratan Watal ( finance) Shaktikanta Das ( economic affairs) and Hasmukh Adhia ( revenue) along with chief economic adviser Arvind Subramanian fielded a wide range of questions from the media, in what was promised to be the first of many such formal interactions. It emerged that the tax collection may fall short of target by 5-7 per cent, and the GDP growth would be at 7.5 percent and the fiscal deficit would be 3.9 percent of the GDP. The seventh pay commission would finalise its recommendations but the impact would be felt only in the next fiscal. Watal expressed a hope that the pay commission would be mindful of the concerns of the finance ministry while making its recommendations.
According to Adhia there is slow growth in direct taxes but the higher indirect tax collections will make up for much of the shortfall, but the year may end with total tax revenues at Rs 14 lakh crore as against the Budget estimate of Rs 14.5 lakh crore.
According to Das the achievement of the disinvestment target of Rs.69,000 crore would depend on the market conditions, and the decisions about the companies and the extent of stake sale would be taken closer to the actual disinvestment .”Otherwise there are implications in the market,” he said. Their consensus was that the economy’s macro-fundamentals remain strong and it is better placed to handle unforeseen external shocks. It also emerged that the government would not nudge the banks to pass on the benefit of the entire repo rate cut introduced recently by the Reserve Bank of India to the retail customers as the banks are autonomous when it comes to taking such decisions. An official statement issued after the media interaction said: “Despite the global slowdown and declining export demand, India has emerged as the fastest growing major economy in the world. The government will continue to implement its reform agenda to realise potential growth rate of 8 per cent plus over time”.