Budget draws a credible roadmap for fiscal consolidation

Speaking at the CII Interactive Session with the Ministry of Finance on the Union Budget 2012-13, Mr R.S Gujral, Secretary (Finance and Revenue) outlined a five pronged approach which was kept in mind while drawing up the Budget to help the economy emerge from the current slowdown. According to Mr Gujral, the main aim of the Budget has been on effecting fiscal consolidation, reigniting growth, containing inflation, tackling the problem of tax evasion and keeping in check the burgeoning current account deficit .
According to Mr Gujral, the accent of the Budget was on putting out figures which would be realistic and credible. This has been done by providing a realistic revenue estimate of Rs. 41,000 crore from taxes, Rs. 30,000 crore from disinvestment and Rs.40,000 crore from spectrum sales. This would yield revenue of Rs.1.1 lakh crore which amounted to one per cent of GDP.
Mr Gujral also reiterated the Government’s commitment to cap the subsidy burden to 2 per cent of GDP in the current fiscal .He said that the Budget has focused on demand driven growth for which there has been a conscious decision to raise Plan Expenditure. He mentioned that inflation has been accorded top priority in the Budget and it is in this context that the rate of excise and service tax has been enhanced to 12 per cent as against 14 per cent during the pre-crisis period. The 2 per cent rise in excise and service tax would make an impact in the short run but this is very much in consonance with the medium term objectives of the government.
The Budget has also taken measures to curb tax evasion while import duty has been hiked for gold to dissuade its imports and check current account deficit. Mr Gujral mentioned that steps had been taken in the Budget to bring the Central government closer to the implementation of GST while DTC would be implemented from next year.
The panel also included Mr Laxman Das, Chairman, CBDT, Mr.S.K Goel, Chairman, CBEC and Joint Secretaries Mr Vivek Johri, TRU, CBEC, Mr V. K Garg CBEC, Mr Sunil Gupta, TPL, Mr Ashutosh Dixit, TPL and Mr. S.K Mishra, Joint Secretary International Taxation who took questions from the audience on direct and indirect taxes.
New Delhi
19th March 2012