Mumbai: Ahead of the Budget, Finance Minister Arun Jaitley hinted at more reforms for faster economic growth and rationalisation of expenditure, saying the government does not believe in living on borrowed money. The statement comes on the heels of the government already touching 99 per cent of market borrowing plan estimated in the Budget, as of end November - four months ahead of the end of the financial year on March 31.
"We're trying to rationalise expenditure as far as the government is concerned because we do not want the government to live on borrowed money indefinitely. The whole concept of spending beyond your means and leaving the next generation in debt to repay what we are overspending today is never prudent fiscal policy," he said. The minister also hinted at stable tax regime to be unveiled in the Budget, saying no unfair effort will be made the state and the Centre to mop up revenues.
"Our taxation policy was not exactly investor friendly. In the last few months, we've made a huge effort to smoothen tax disputes and those issues which were bringing the Indian revenue structure a bad name. "I've always believed that where taxes are to be paid, taxes will be collected, but no unfair effort will be made by the state so that investors are unnecessarily harassed in that area," he said.
The government recently decided not to appeal against the Bombay High Court verdict in favour of British telecom major Vodafone in a Rs 3,000 crore transfer pricing case. The Finance Minister said the Budget will focus on reforms in power, energy, railways and ports and also hinted at more public investment into these sectors. Addressing a gathering of top industrialists and planners through video conferencing at an event - 'Mumbai First: Turning the city into an international finance hub' - Jaitley hinted that the 4.1 per cent deficit target will be met as also at more cuts in the planned expenditure. After taking over the charge eight months ago, Jaitley already had reduced planned spending by 10 per cent and since the tax mop up has not been pacing as planned, it has been reported that more cuts are on the way.
Besides, not even 50 per cent of the target from the divestment proceeds has been met so far. Stating that the past ten years were a decade of missed opportunities, Jaitley said the government is determined to pursue the path of reforms. "We could have been on the faster track if we had kept up the momentum from 1991 to 2004. But a series of indecisions and wrong decisions created a situation for us where we were almost missing the opportunity.
"But history has revisited that opportunity to us, and the present government is very determined to doggedly pursue a path of reforms and take India to a high growth trajectory," he said, and sought active co-operation of the industry and policy makers. To a question from Reliance Industries Chairman Mukesh Ambani on how to finance the city's infra projects, Jaitley said: "I think the question goes to the root of the issue not only in relation to Maharashtra but for the whole country."
The power-packed audience included state Chief Minister Devendra Fadnavis, Tata Group Chairman Cyrus Mistry, Anil Ambani of the Reliance AGAD group and Axis Bank's Shikha Sharma. "Infrastructure creation in the last few years has admittedly slowed down. If we are in the new environment where people are looking at us with a positive vision, if we want to see the effect on the ground, it is quite obvious that in the first instance the structure of financing has to be put in place," Jaitley said.
He reiterated the Modi government mantra of faster decision-making, saying that obviously, there will be quick decision-making. "Our government is development and business-friendly. So, whether it is development of airport or completion of the sea-link in Mumbai, development of coastal roads, expansion of education network or skill development, these are all priority issues for us," he said.
Assuring full assistance and support from the Centre to states' infra development needs, Jaitley said. "We will now have to enter a new age where all models of financing as far as infrastructure is concerned, have to be explored. We will have to increase the level of public spending for infrastructure. We will have to convert domestic savings into investment for infrastructure."
On meeting the funding requirements for the infra projects, he suggested emulating international financing models. "I think the international models of inviting finance, which is internationally available from various sources, is extremely important. "In the last few weeks we have had a series of visitors who showed a great amount of interest in financing our infrastructure if a particular model can be created. I cannot go into details of these models, but these are under active consideration of the government and you will see soon hear from us," Jaitley added.
