Jaitley rejects Moody's pessimism

Sticks to 8.1-8.5% GDP growth

Finance Minister Arun Jaitley on Monday stood by his ministry's economic growth projection of 8.1-8.5 per cent for 2015-16 even as global ratings agency Moody's Investors Service last week projected the economic growth to slow down to seven per cent, lower than 7.3 per cent witnessed in the previous financial year. "We stand by the growth projections for the financial year made at the beginning of the year," said Jaitley, at the inauguration of the two-day Annual Conference of Chief Commissioners and DGs of the Central Board of Excise and Customs (CBEC) here. He said that the Indian economy is in revival mode and there is a consistent pattern in indirect tax mop-up this year. Domestically, a lot of blocked and pending projects have been cleared up. Fiscal deficit and inflation are both under control," Jaitley said.

Last week, Moody's had cut its projections for India's economic growth forecast from 7.5 per cent on drier monsoon. Jaitley said the demand and economic activity will expand in the coming months on the back of a reasonable monsoon. The GDP data for the first quarter of the current financial year would be out next Monday.

"The Indian economy is not impervious to global events yet the growth in manufacturing and services sector - as reflected by the increase in indirect tax collections - and a fair monsoon indicate that the economy is showing strong revival and growth," he said.

India's indirect collections rose by over 37 per cent in the first four months of the current financial year-on-year. The mop-up grew 14 per cent, if additional measures such as hike in excise duty on oil in four phases since October last year and removal of excise duty sops to auto, capital goods are not taken into account.

The Budget targeted indirect tax collections growth at 19.4 per cent for 2015-16. Jaitley said the tax collection targets for 2015-16 are realistic and should be achieved, against ambitious targets set for 2014-15. Jaitley had earlier said that he had taken the numbers from what his predecessor P Chidambaram had given in the interim Budget.

The government is targeting fiscal deficit at 3.9 per cent of the GDP in the current financial year, pushing the roadmap of reining it at 3.6 per cent by a year. The deficit touched Rs 2.85 lakh crore in the first quarter of the year, over half the targeted Rs 5.55 lakh crore in the Budget estimates.

On the goods and services tax (GST) that still faces stumbling block in the Rajya Sabha, the finance minister said, "Sooner rather than later, the goods and services tax Bill should see the light of day.

GST has the capacity to add to the country's GDP growth," he said. Describing the GST as a "monumental tax reform," Jaitley said it is going to be extremely business-friendly and would widen the tax base and reduce the harassment of taxpayers. The ministry of finance is administratively prepared to rollout the GST Bill from April 1, 2016. The government is looking at a two-day pre-winter session to pass the Constitution amendment Bill for GST.

"It is a reform which almost all states have favoured. It's a reform almost every political party has committed itself to. And I have not the least doubt that in every state, we had some questions raised but eventually GST is an idea which everybody accepted. Sooner rather than later, the Constitutional amendment should see the light of day," said the finance minister.

He added that the revenue department is in touch with the Empowered Committee of state Finance Ministers and state governments and is keeping ready the pieces of legislation necessary for GST rollout. Revenue Secretary Shaktikanta Das said a sub-group has finalised a report on GST laws and others are expected to do so by mid-September.

THREE NEW DIRECTORATES

• The central board of excise and customs (CBEC) has set up three new directorates to streamline tax procedures and employ resources for the smooth implementation of goods and services tax (GST)
   
• The three directorates will essentially deal with taxpayer services, performance evaluation and GST
   
• Finance Minister Arun Jaitley said that the three new directorates would increase the capacity of the CBEC to effectively interact with stakeholders