Hinting that the next key reforms will be the easing of foreign investment regime, Finance Minister Jaswant Singh on Wednesday asserted that economic growth would be more than 8.4 per cent in the third and fourth quarter and fiscal deficit within target despite Rs 12,000 crore (Rs 120 billion) customs and excise sops last week.
"Although a finance minister cannot speculate about the growth figures," he said that the macro conditions, which enabled the country to achieve 8.4 per cent growth in the second quarter of this fiscal, would in fact improve in the next two quarters.
"If inputs to GDP is improving, the output (economic growth) has to improve. I am more than sure that the growth in the next two quarters would be better than second quarter ," Singh said.
Asked if there would be direct tax sops in the near future, Singh said: "Why be impatient. Just wait for a few days. Key reforms now is to further open up FDI (foreign direct investment) and FII (foreign institutional investors) regime."
Although further fiscal consolidation was necessary, Singh said that fiscal deficit would be within the targetted 5.6 per cent level despite the tax sops recently in the face of buoyant growth.
To a question on when the vote-on-account would take place, Singh said it was for the parliamentary affairs minister to decide.
Singh parried questions whether Foreign Investment Promotion Board was being dismantled. "I have also read the newspaper reports," he added.
Asked if there would be no economic survey this year in the event of government not going in for full budget, Singh said that after the Fiscal Responsibility and Budget Management Act, the government was mandated to present to Parliament the performance of the economy every quarter.
"Vote-on-account is part of interim budget, which is total rendering of full year's expenditure and gross budgetary support to states," he said, adding that the interim budget too involved a lot of work.
Singh said that the proposed divestment of 10 per cent of equity in public sector oil units GAIL and ONGC in the domestic market would enable the government to be closer to the divestment target of Rs 13,200 crore (Rs 132 billion) this fiscal.
He also said it was up to the divestment ministry and merchant bankers to decide on the price.
"It (divestment) is between the jaws of the system (ministry of divestment, SEBI and system)," he said.
Voicing concern over surging Inflation rate now about 5.5 per cent, Singh said that the government continued to "closely monitor the price behaviour, leaving no room for complacency on the inflation front. I think we will enter the fiscal year at 4-4.5 per cent."
There has also been an improvement in central government finances. The gross fiscal deficit of the central government will show an improvement, though "I do recognise the need for continuing to further the fiscal consolidation of our economy, he said.
On management of fiscal deficit, Singh said: "I would like to assure you that when I present my reports in Parliament, you will be surprised."
"Lesser is the interface between the taxpayers and tax officials, lower is the irritation. At present the perception of the people about tax system is that of a scorpion -- you go near it, it will sting you. We want to remove this perception," Singh said.
Computerisation of tax system including scrutiny and putting in place an impersonal and efficient tax system with minimum exemptions are on course. And soon, our tax system will be amongst the most advanced in this regard," he added.
Key reform items that currently are on the agenda include a review of limits on foreign direct investment and foreign institutional investors investment, the finance minister said.
Referring to the budget announcement, he said it has resulted in substantial infrastructure development to aid economic and social growth.
In telecom, Singh said: "The new unified licensing regime should encourage further competition and translate into benefits for consumers."
Engagement of foreign expertise in ports have resulted in reduction in turnaround time and further improvement is expected, he said.
With the passage of Electricity Act last year, Singh said: "It is expected there will be much more power trading and better utilisation of existing capacities in generation."
In the area of airports, Singh said: "In addition to the development of Delhi and Mumbai as world-class airports, the Bangalore airport is also making progress in a public-private partnership framework."
"This developments will help strengthen India's air links to the world and help drop costs of airline travel," he added.
On the ongoing Golden Quadrilateral road project, the minister said it would encourage efficient growth of our transport system.
Singh summed up saying that the macro economic conditions have never been better in the last 15 years with all the three important sectors -- agriculture, services and industry -- posting high growth, and reserves were at an all time high of over $100 billion.
