Finance minister Yashwant Sinha yesterday said the Union Budget would have a two-pronged strategy: A major step-up in productive public expenditure and additional revenue mobilisation by encouraging tax compliance and not by hiking rates.
Addressing the CII national symposium, Sinha said, There is no running away from expenditure in this budget. This is no secret. Indicating that the government would not shy away from its commitments, he said, I am prepared to risk my money. I will make my investments and wait for your taxes. I dont want to be caught in the chicken-and-egg syndrome.
He said the growth impulse in the economy emerges largely from public expenditure. Ther efore, we will have to earmark for productive expenditure.
The minister, who left last night for a two-day visit to Geneva to address the annual meeting of the ADB, assured industrialists that the government would not unleash an inspector raj.
Exhorting the audience to treat timely payment of tax dues as an act of patriotism, he said, If you are looking for magic, then the balance in the budget will come from compliance. Evasion and avoidance is not likely to help. Hence it will require tough measures in the forthcoming budget.
Later, the minister said the BJP-led coalition would respect the RBIs autonomy in formulating monetary policy. If the situation demanded, the government would not hesitate to amend the Act to extend more freedom to the central bank.
According to him, further liberalisation of the financial sector would take place only once a regulatory structure was put in place.
The minister also stressed the governments intention of stepping up savings levels. This, he said, would be pursued by promoting savings on the one hand and reducing or eliminating dis-savings by the public sector.
