Finance Minister Arun Jaitley says revival of economy has begun

Finance Minister Arun Jaitley said on Tuesday that the government has managed to bring the current account deficit within comfort level with help from falling oil prices and added that economic revival has begun.

In a pre-Budget interaction with economists in the national capital, the Finance Minister said that with a sharp decline in global oil prices and due to focused attention from the government, the current account deficit (CAD) is also within the comfort level.

The government, Jaitley said, is committed to fiscal discipline, boosting investment in infrastructure and reviving of manufacturing sector.

"Global economic situation is facing a critical challenge and the present government is committed to regaining investors' confidence," an official statement quoted him as saying at the meeting.

Stating that the government has taken lots of initiatives in the last 7-8 months, Jaitley said overall, with growth improving and inflation and external fronts under control, macro-economy stability has improved.

He said that the deceleration in growth had bottomed out and the revival had begun.

The economy registered a higher growth in the first half of the current financial year at 5.5 per cent as compared to 4.9 per cent in the first half of 2014, and 4.7 per cent in FY14.

Economists who attended the meeting included Errol DSouza, IIM Ahmedabad, Rohini Somanathan, Delhi School of Economics, Chetan Ghate, ISI, Delhi and Sabyasachi Kar, Institute of Economic Growth. During the meeting, economists in general expressed their optimism about growth of the domestic economy and its capacity to realise its full potential in near future.

Focus will be given to domestic market and consumption as global economy is still not showing positive signs of growth except the USA, the statement said. Major suggestions included focus on boosting growth, containing inflation, rationalisation of subsidies, containing fiscal deficit and above all, bringing back the investors confidence among others, the statement said.

The suggestions were received for larger public investment in agriculture, infrastructure sector including rural infrastructure among others, it added. Besides this, suggestions were made for fiscal consolidation, change in structure of budget formulation including adoption of accrual accounting system in place of cash accounting and maintaining credibility of numbers, raising revenue resources through sales of spectrum, road map for subsidy rationalisation in areas of food, urea and kerosene etc.

It was suggested that a single window system be implemented both at Centre and state-level for ease of doing business. Some other suggestions included recapitalisation of banks, push in disinvestment to achieve targets, establishing institution for long-term fiscal policy and new fiscal framework.

Other suggestions received for tax reforms included widening tax base, making culture of tax compliance involuntary, not raising the threshold limit of income tax, and tax on agriculture income, setting-up more tax tribunals in a time bound manner. Further, focus on revival of banking sector, setting up a committee of retired and experienced bankers to resolve cases of NPA, making MD &CEOs of PSBs accountable to Board of Directors of the bank, were some other suggestions.