NEW DELHI: Economists have asked the government to draw up a clear spending road map to reverse slowdown and relax fiscal deficit target, but ensure fiscal numbers are credible. They remain divided over reduction in personal income tax in the upcoming budget.
At the pre-budget consultation with finance minister Nirmala Sitharaman, some economists suggested relaxation in fiscal deficit target, pegged at 3.3% of GDP for FY20. “If the government wants to go in for relaxation of fiscal deficit target, it should do so unapologetically, but it needs to ensure numbers are credible and honest,” said an economist who was present but did not wish to be identified.
The economist said the point made was that markets only get unnerved over surprises and transparent and credible deficit, even if, higher would be acceptable. They also emphasised on boosting spending towards sectors such as infrastructure to boost growth, the person said.
“We have bottomed out as far as growth reduction is concerned… what can be done to accelerate growth to 7-7.5%,” said former chief economic adviser Arvind Virmani, stressing implementation of Direct Taxes Code as crucial for small businesses. He also pitched for simplification of GST and rationalisation of slabs.
An official statement on Friday said the economists put forth suggestions to achieve the $5-trillion economy, including streamlining policy matters, faster resolution of policy issues, fiscal management; power reforms; structural reforms to simplify GST and Direct Tax Code; securing supply chains for economy, continuity in economic policy making, land and labour reforms, ways to enhance rural demand; improve oversight of financial markets.
Core sector wishlist
The infrastructure sector wants funds meant for it released as soon as possible, for bringing in buoyancy in the economy. It has asked to make finance available for real estate to boost consumption of cement and steel. The industry also sought a captive renewable energy policy and exemption from cross subsidy and transmission charges for better viability for those willing to set up plants beyond factory boundaries. Industry groups present at the meeting highlighted challenges vis-a-vis framing of trade rules and policies in global context and quality of resilience.
Source: Economic Times