Economists push for fiscal consolidation, tax reforms in pre budget meet

Leading economists of the country suggested a range of measures including those for fiscal consolidation, tax reforms, disinvestment of Public Sector Units (PSUs), lowering of corporate tax at the Pre Budget consultation meeting with the Union Finance Minister Arun Jaitley.

"Suggestion was made to lower the Corporate Tax up to 20 percent by removing all exemptions in order to make it competitive at international level. It was also suggested to tax Long Term Capital Gains to bring equity and raise revenue and reduce MAT (Minimum Alternate Tax)," the Finance Ministry said in an official release.

The economists recommended that in the forthcoming budget, the Government should continue to follow the path of fiscal consolidation and also said that more incentives should be given on infrastructure investment as well as to SME and construction sectors without compromising on macro-economic stability.

"It was suggested to issue long term New India Bonds to finance pension and infrastructure and to set-up National Level Investment Promotion Body to promote private investment through policy reforms and incentives," the release stated highlighting that the economists recommended to boost private and public investment in Defence Sector.

The Union Finance Minister Arun Jaitley in his opening remarks at the meeting said that despite subdued global economic growth, India's growth remains impressive and one of the best in the world during the last three years.

"Growth of Second Quarter of the Current Financial Year 2017-18 marks the reversal of the declining trend of growth witnessed in the last few quarters and we are following the roadmap of fiscal consolidation," Jaitley said adding that the fiscal deficit as a ratio of GDP stood at 3.9 percent in 2015-16 and 3.5 percent in 2016-17 and is budgeted to be 3.2 percent for the Current Financial Year 2017-18.

The Finance Minister further said that these fiscal targets have been achieved due to focus on expenditure rationalisation, plugging of loopholes in public expenditure through Direct Benefit Transfer Scheme (DBT) and the Public Financial Management System (PFMS), and by making innovative revenue raising efforts among others.