Assuring India Inc of National Democratic Alliance's commitment to carry forward economic reforms, Finance Minister Arun Jaitley on Saturday said the government will come out with more steps to rationalise subsidies.
"I had a series of meeting with the Expenditure Management Commission. They are effectively working on some very valuable suggestions with regard to rationalisation of subsidies. . .
"In the next few, even months. . .may be earlier than that they will be able to come out with some interim recommendations to us so that we can proceed with rationalisation in that direction", Jaitley said.
Recalling the government's decision to link the diesel prices with market price, the minister told the India Economic Conclave said that it would help in reducing the subsidy burden of the government.
Besides, the government has recently decided to give direct cash subsidy on pilot basis to liquefied petroleum gas customers in select cities.
The Centre had set up a Commission under former Reserve Bank of India Governor Bimal Jalan to suggest steps to rationalise subsidy and help the government in effectively bringing down the fiscal deficit.
The government currently provides various kinds of subsidies which run into lakhs of crores of rupees.
It was pegged at Rs 2.51 lakh crore (Rs 2.51 trillion) for 2014-15.
Speaking at the Conclave organised by television channel ET Now, Jaitley expressed confidence that the government would be able to push the Insurance and the Goods and Services Tax bills in the current session of Parliament.
On the government's views on a joint session of Parliament to push the bills as it does not have a majority in the Rajya Sabha, he said: "We don't want to use the last resort of a joint session for legislations. But if it becomes inevitable that's a constitutional remedy."
On Prime Minister Narendra Modi's meeting with chief ministers on Sunday on replacing the 64-year old Plan Panel, Jaitley said: "Empowering the states has been one of our critical belief.
"I do hope that after tomorrow's meeting, whatever decision will be taken, probably states will be in a better position."
Describing the response of market in yesterday's steel major SAIL's share sale as encouraging, the finance minister said it is an indication that depth of the market is improving.
"The divestment programme of the government took off yesterday. Yesterday, response of the market has been fairly encouraging.
"Particularly, the fact that the retail investors oversubscribed the SAIL's issue by two and half times.
"On PSU stocks, retail investors coming in a big way also is an indication. . . that the depth of market seems to be improving somewhat," he said.
SAIL's share sale, the first disinvestment offering this fiscal, was subscribed over two times fetching the exchequer Rs 1,715 crore (Rs 17.15 billion).
Government has set a target of Rs 43,425 crore (Rs 434.25 billion) through selling stakes in various PSU firms during the current fiscal.
The finance minister also expressed hope that he will able to achieve the direct tax collection target.
"In terms of direct revenues, I seem to be very close to what I had said. . . My real challenge is indirect taxes, and indirect taxes are relatable to the growth in the manufacturing sector itself .
"Indirect tax collection is moving little slowly upwards.
“I do hope in the months to come we can see significant movements in that direction," he said.
The government aims to collect Rs 7.36 lakh crore (Rs 7.36 trillion) from direct taxes in current fiscal, up from over Rs 6.36 lakh crore (Rs 6.36 trillion) collected last year.
As regards indirect tax, the target is to collect over Rs 6.24 lakh crore (Rs 6.24 trillion), up 20.28 per cent over the collection in 2013-14.
On the land acquisition law, Jaitley said this has created a very challenging situation and expressed hope that the government will able to find a solution in the next few weeks.
"Unless some changes are made and the processes are eased, that law is going to have an adverse impact on future growth of Indian economy.
“I have myself engaged in a active discussion within the government and also with some of my colleagues in opposition," he said.
"And I do hope over next few months we are able to effectively find a solution to this problem," he added.
Speaking at the conclave, ICICI Bank CEO Chanda Kochhar said "the whole push towards (new government's effort to boost manufacturing) I think directionally is a big achievement."
Talking about the focus area for the government, she said, "what needs to be done is to achieve the final closure for the various projects that have been languishing and dragging so far."
Besides, there is need to improve supply side so that inflation in long term can be tamed.
"The second focus I would say is the supply side of economy which means improve production and increase production, declog everything in agriculture supply chain, make sure that the supply in the economy increases because that's the only way that can in a long term structurally control inflation," she said.
"We have to look at now taking smaller steps that can bring back confidence of re-starting investment in the economy," she added.
Image: Finance Minister Arun Jaitley; Photograph: Reuters
