Ahead of the 2015-16 Budget, Finance Minister Arun Jaitley on Monday said there was a need to rationalise all subsidies and ensure stability in policies to attract investment and drive growth.
“From January 1, cooking gas subsidy is going through banks...We have to gradually rationalise all possible subsidies,” he said, at a Confederation of Indian Industry event here.
The government is expected to incorporate the suggestions of the Expenditure Finance Commission headed by former Reserve Bank of India governor Bimal Jalan in the Budget proposals.
Jalan is reported to have submitted interim recommendations to the finance ministry suggesting various steps to rationalise subsidies and public expenditure.
Jaitley also said the government’s aim was to rationalise taxes in a “non-adversarial manner”.
He said over recent months he’d been working at this.
“Our taxation is too adversary and we scared investors away (in the past),” he said. “Our efforts are (also) going to make sure that our (taxation) structure is transparent.”
Adding: “I don’t favour the idea of having any concealed fiscal deficit.”
The minister said the initial phase of the government had been aimed at restoring the credibility of the economy. “Our decisions are now consistent and transparent.”
On the Centre’s decision to take the ordinance route to introduce some legislation, Jaitley said it was a forced choice, as the wisdom of the Lok Sabha was being constantly questioned by the indirectly elected Rajya Sabha.
“I can understand it happens once in a while but it raises a serious question on our functioning, if every legislation passed by the directly elected house is questioned by the indirectly elected house. In such a case, you have to resort to the constitutional mechanism (through ordinances). If one house is not allowed to function, that doesn’t mean the country will stop functioning.”
On fiscal reforms, he said the Centre wished to take along state governments, after addressing their concerns. An example was on the goods and services tax. On this, he assured, no state would lose a single rupee of revenue. Also, for the first five years after the tax was introduced, the Centre would provide a cushion for all states.
“GST, in the long run, also means lower tax,” said Jaitley, adding the Centre wanted to cut the number of centrally-sponsored schemes, so that the state had more money in their hands to spend on own welfare schemes. States and political parties, he said, ought to have a common national vision on economic policies, as they did on security and foreign policies. Besides the global attitude to India, the domestic mood had also changed, he said.