‘India Is Serious About Fiscal Consolidation’- Nirmala Sitharaman, Indian FM
Delhi -Speaking to the International Monetary and Financial Committee today, Union Finance Minister Nirmala Sitharaman has said that India is committed to bring its economy back on the path of fiscal consolidation in the near-to-medium term. She has announced the Indian government’s set target to reduce fiscal deficit to 4.5 percent by 2025-26.
For this, she has said, that Indian government is willing to provide additional capital to Public Sector Banks (PSBs) as and when needed and that it is heartening to see how the trajectory of inflation is shifting down more favorably than anticipated.
The minister has also said that revenue mobilization would be a key element of medium-term fiscal strategy. Streamlining with e-invoicing, Goods and Services Tax (GST) audits, closer scrutiny of returns, and rate rationalization are all expected to augment GST revenues; rationalised corporate income tax rates are also expected to improve tax compliance and tax buoyancy.
Disinvestment with a focus on privatization and monetization of sovereign assets would also support the consolidation process, the finance minister said. Meanwhile, with regards to retrospective tax, Ms. Sitharaman said that the Biden administration and American leaders from the corporate sector are extremely pleased with the positive step taken towards the reform undertaken by the Indian government.
Speaking over the development, she has said, “Many of them (businesses) thought it was bold and even though it took some time to come. We have also explained that they were legal compulsions before which we had to wait because some of the litigations which were going on had to come to a logical conclusion,” Sitharaman said. Further, the finance minister has reassured that with the pandemic tensions easing, and supply conditions restored with productivity gains, a sustained easing of core inflation can be expected, which will reinforce the growth-supportive stance of monetary policy.