On the revenue side, rolling back some of the excise tax cuts from last year is appropriate at this juncture. The target of Rs 40,000 crore in disinvestment receipts, if achieved fully, will not only support the fiscal position but also galvanize investor sentiment further. Measures to widen income tax slabs and reduce the income tax surcharge on domestic companies will benefit the economy by improving tax administration. I also welcome the government’s announcement to implement the GST (goods and service tax) and the direct tax code in 2011.
On the expenditure side, I welcome efforts to bring fuel and fertiliser subsidies on Budget and to make the subsidies better targeted. Further progress in this area will help address one of the largest sources of budgetary drains in recent years.
Steps toward reducing the deficit and debt are going to benefit the economy. The large overhang of public debt and the strong prevailing momentum of the economy made a strong step toward fiscal consolidation both essential and feasible. I welcome an envisaged improvement in the fiscal deficit by more than 1 per cent of gross domestic product in the coming year.
