Finance Minister Arun Jaitley on Thursday said that by keeping the current account deficit under control, India had kept a stable momentum by trudging on a 7-8 per cent growth trajectory. He assured that the country had reached a point where it could "earn what it spends". Appreciating India's effort in bringing down its fiscal deficit, he also hinted the government might rationalise the Goods and Services Tax (GST) rates once the revenue generation stabalises.
On achieving the double digit growth rate at a time when it the economy is moving at a snail's pace, he said, "Achieving a 10 per cent GDP growth rate is very challenging and it will not only depend upon domestic factors but how the world moves". Stressing that India had structurally reformed and that there's no finishing line, Jaitley said the GST rates could be rationalised by merging 12% and 18% slabs into one, and "it would depend upon the revenue collection". "We started the rationalisation (of GST rates) ahead of schedule. Future rationalisation will depend on how the revenue moves. We have thinned down 28. Going ahead, we will rationalise it further to probably tax only luxury items at 28%," Jaitley said, reported Mint.
Currently, the GST has five slabs - 0 per cent, 5 per cent, 12 per cent, 18 per cent and 28 per cent.
The Finance Minister said the economy has stabalised to a point where it had moved past an old era of double digit inflation. "Our statutorily fixed target is 4 per cent. We have been able to keep our current account deficit under control, and over the last few years India has had exemplary performance in terms of being able to bring down its fiscal deficit," he said.
"One of the great challenges that remained in India and that directly impinges on the creation of the world class infrastructure is that India was largely a tax non-complaint society," he said. Noting that the funding requirement for infrastructure in the country is huge, he said, the sector needs investment of Rs 50 lakh crore over the next five years. India has spent Rs 60 lakh crore in infrastructure during 2007-17. In recent time, the government has increased infrastructure spending, he said, adding the Budget 2017-18 made allocation of Rs 3.96 lakh crore for infrastructure sector.
On the issue of recapitalisation of banks, the finance minister had recently said that the reason for giving capital to banks was that these banks might become mazboot, i.e., strong, rather than mazboor, i.e., hard-pressed. "Public Sector Banks have been provided capital in the past as well. During 2010-11 to 2013-14 too, the government provided banks an amount of Rs 44,000 crore for recapitalisation. Was that also for waiving loans of capitalists?" he said.
With PTI inputs