Mumbai: Confident of an accelerated growth trajectory, Finance Minister Arun Jaitley on Sunday said tax revenues are expected to be higher this year while improving macroeconomic fundamentals and ongoing reforms make 8-10 per cent growth “eminently achievable”.
He also said monsoons are progressing well and there are expectations that “rain gods will be kinder” this year, which would result in higher production of pulses and other items.
Monsoon was above normal in June with 25 per cent excess rainfall despite a late arrival and a drought-like prediction and the rest of the monsoon may also be good, he said.
Speaking at the Nabard Foundation Day function here, Jaitley said the “silver lining” is that revenue collection situation is expected to be more comfortable than last year.
He said with the ongoing reform process, proposed GST, increased infrastructure investment and emphasis on smart cities, India can very much achieve 8-10 per cent GDP growth.
“When all these initiatives get onto the field, then our aspiration to cross that 8 per cent level and get on to the 8-10 per cent growth target is not something which is completely out of sight, but is something which may be imminently achievable,” he said.
The Minister said there are “some sporadic data” which indicate a significant recovery and referred to the indirect tax collection during the first quarter of the fiscal.
The data indicates that Customs Duty, Excise Duty and Service Tax, even without additional revenue measures, were up 14.5 per cent over the past fiscal, Jaitley said.
If the additional revenue measures are taken into account, the total indirect tax revenue mop-up has been up 37.5 per cent, Jaitley said, while adding that the nominal GDP growth will be much higher.
Jaitley, however also cautioned the economy also has its owns challenges, while there are “reasons for us to smile” with a growth figure of 7.3 per cent for last year and the projected growth rate of 8 per cent for this year in the backdrop of a slowdown in global economy.
“… There are some indices which give us an image of a macroeconomic stability,” he said.
The Finance Minister further said India is better placed than most other economies.
“On the surface, with various parameters and how the global economy is doing, when we compare ourselves, we may have some opportunity to cheer. Because even in challenging times, we are being looked upon as a brighter spot.”
On the global economy, he said the world is passing through troubled times and the IMF has lowered the global growth rate to 3.3 per cent for 2015.
Allaying fears of any poor monsoon-driven troubles for the farmers and the consumers, Jaitley said the government has taken a number of initiatives. He referred to the recently announced Rs 50,000 crore programme for a national irrigation.
“And I can tell you that this is only the beginning…I am full confident that with the economy likely to move up in the next few years, resources will be available…
“We are fairly clear about the fact that a large part of investment will have to go into agriculture, mitigating this rural distress and indebtedness of the farmer,” he said.
Promising more sustainable measures for the farm sector so that the farmers are not left to the mercy of rain gods, Jaitley said “hopefully, in the near future, a viable and vibrant insurance scheme will be in place for farmers.Jaitley said India needs higher growth as well as redistribution of resources.
“We need higher growth on one hand and we need to flag the concerns of the economy in those sections where the benefits of that growth process must reach first.”
“And I can tell you that this is only the beginning… I am full confident that with the economy likely to move up in the next few years, resources will be available…
“We are fairly clear about the fact that a large part of investment will have to go into agriculture, mitigating this rural distress and indebtedness of the farmer,” Jaitley said.
He said Ashok Gulati, who is the Infosys chair professor for agriculture at the economic think-tank Icrier, has made a very valuable presentation to him offering “a doable and effective insurance programme, wherein the farmer is at least able to recover the basic inputs that he puts in in the events of uncertainties created by more than one reasons.”
In spite of a not-so-rosy picture on the manufacturing front, the government data yesterday showed that indirect tax collections grew in the June quarter to around Rs 1.54 lakh crore, powered by a robust show
in excise collections, from Rs 1.12 lakh crore in the year-ago period.
However, core sector data and IIP figures have painted a disappointing picture.
While factory output was better than expected in April at 5.1 per cent against 2.8 per cent y-o-y, in May this nearly halved to 2.7 per cent from 4.1 per cent a year ago.
Retail inflation also edged up to 5.01 per cent in May.
On the Greek crisis Jaitley said, “We have the lesson from Greece to learn today. And the big message is that the countries must learn to spend within their means.
“If they did not do that then they will have unusual crisis confronting you. And therefore we are well tracked on a roadmap where our own fiscal deficit (3.9 per cent), CAD (1.02 per cent of GDP in 2014-15) are broadly coming under control and inflation is under control.”