Considering the mess that Mr Arun Jaitley has inherited as Union finance minister, it is only reasonable to expect he will have to take tough measures to contain the fiscal deficit. He has said in a Facebook post that the country must move into an era of discipline to strengthen the Indian economy and pull the deprived out of poverty. Mr Jaitley and his colleagues will need political will to see that the strong bear a heavier burden. For instance, the UPA-2 government had given over Rs 5 lakh crore to the business community, both foreign and domestic, by way of taxes and several other concessions.
This could be cut substantially if the government immediately attends to issues like ease of doing business. Similarly, in the case of subsidies on food and fertilisers, which anyway go to the corporates instead of directly to farmers, and with the oil subsidy totalling over Rs 3 lakh crore, there is plenty of room for the government to cut and slash by plugging leakages and targeting recipients.
It has already talked of employment-oriented growth, and this includes the National Rural Employment Guarantee Scheme. It could also make schemes under the corporate social responsibility regime productivity-oriented. All this will ensure more people have purchasing power which will, in turn, increase demand and boost manufacturing. Strong measures to control the fiscal deficit are needed but the burden on the people can be reduced if corruption and leakages are brought down substantially through effective monitoring.
