The government might miss the April 1 deadline for rolling out the much-anticipated goods and services tax (GST), Finance Minister Pranab Mukherjee indicated today.
“The empowered committee of state finance ministers, headed by West Bengal Finance Minister Asim Dasgupta, is trying hard to bring about a consensus among the states…we are working together, but it may not be possible to roll out GST from April 1, 2010. But I am quite sure, it will be possible for us to introduce GST at an appropriate time,” Mukherjee said at the Industrial India Trade Fair, organised by the Bengal National Chamber of Commerce and Industry and the West Bengal government.
The finance minister mentioned GST in the context of the need to expand revenue sources to bring down the fiscal deficit.
He said fiscal consolidation was one of the major concerns before the government. “We cannot live with this high fiscal deficit. The Centre and states have to ensure that it (fiscal deficit) comes down and the answer lies in expanding revenue sources. We have to rationalise subsidy and enhance the revenue base,” said Mukherjee.
On fertiliser subsidy, he said: “I am in touch with the Ministry of Fertilisers on how to rationalise it, so that the subsidy reaches directly to the farmers.”
The government has set a target to bring down the fiscal deficit to 5.5 per cent of the gross domestic product (GDP) by 2010-11 and to 4 per cent by 2011-12 from the current level of 6.8 per cent.
Mukherjee also said that the government was in no hurry to withdraw the fiscal stimulus. “The stimulus packages were injected to boost the economy. Unless full recovery is possible and when the planners are able to make an assessment that it is time to withdraw, only then the stimulus will be withdrawn,” he said.
However, the finance minister has taken an “optimistic” approach to project 7.5 per cent growth for the economy in 2009-10 exceeding last year’s 6.7 per cent.
“The Reserve Bank of India (RBI) had projected 6 per cent growth and the Prime Minister’s Economic Advisory Council projected 6-6.5 per cent growth, but I have taken an optimistic approach,” Mukherjee said.
The basis of his optimism was the industrial growth. The finance minister said in the third quarter even if the agricultural growth turns negative because of adverse impact of the monsoon in some parts of the country, it would be adequately compensated by the industrial growth. In the second quarter, the contribution of agriculture was 0.91 per cent.
