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PM Modi's 5-point 'masala' to kickstart economy

16 September 2018

Jaitley's comments came after a review meeting of various departments of the finance ministry in New Delhi which was chaired by Prime Minister Narendra Modi.

He also said that the government was confident of not only maintaining the disinvestment target this year but also probably surpassing it, as was done last year. "We will have a growth rate higher than what we'd projected earlier this year in the budget", Jaitley said while adding that there will be no capital expenditure which means growth will not have to face any hurdle.

"As far as capital expenditure is concerned, already we have spent about 44% of the budgeted expenditure till 31 August and we will end the year without any cuts and will maintain the 100% capital expenditure", he said.

The Goods and Services Tax (GST), he said, is settling down. He said that during a presentation given by RBI it was said that India's growth is fast compared to other economies and inflation was also in moderate rage. This comment appears to be reply to some experts who fear that the fiscal deficit will be higher than the budget target as deficit (difference between income and the expenditure of the Government) for the first four months (April-July) of the current fiscal has already exceeded 86.5 per cent.

Asked if fuel prices and duty cuts were discussed, he said the meeting today was internal review meeting.

"The CBDT is very clear that this year they will be able to collect in excess of budgeted target", he said.

Nearly half of the retail selling price of petrol and diesel is made up of central and state taxes. The fuel hike has led petrol touching a record high of Rs 81.63 per litre and diesel to Rs 73.54 a litre.

The steps include removal of withholding tax on rupee-denominated bonds known as Masala bonds issued till March next year, relaxation for Foreign Portfolio Investment (FPI), and curbs on non-essential imports.

The departments of economic affairs, revenue and expenditure made presentations to the prime minister during the meeting on Saturday. Jaitley said the PM expressed satisfaction with the health of the economy and the macroeconomic data which had emerged so far. "We are now seeing the impact of demonetisation on direct taxes", said M.S. Mani, partner, Deloitte India.

"There is a phenomenal increase in the quantum of advance tax which has been paid".

The government has targeted a 14.43 per cent increase in direct tax collections at Rs 11.5 trillion in 2018-19 against Rs 10.05 trillion the previous year. "With the kind of pickup in consumption which has taken place, it will have an impact on GST collection in future months".

Experts said that the optimism on meeting tax target was well placed.

PM Modi's 5-point 'masala' to kickstart economy