Finance minister Arun Jaitley on Saturday said the ballooning subsidy bill needs to be lowered by rationalising the dole-outs.
Stating the government should not be doling out pre-poll populist measures that increases the subsidy bill, Jaitley said, “If we waive off loans, empty the government treasury, and destroy economic discipline, then I feel this would not help the economy or the country.” Admitting he too gets subsidies, Jaitley said, “But I firmly believe I have no right to avail of those subsidies.”
However, the minister, who was speaking at a BJP-organised function in the city, did not elaborate on the issue. It can be noted that after touching a low of under 2.5% of GDP in FY07, the government borrowings have been on a continuous upward spiral. This pushed up the subsidy bill to over 2% of the GDP as of FY14. The subsidy bill, which began when the economy was clipping past 9%, did not show a decline during the slowdown period.
Jaitley also said the current situation of high inflation and low growth has to be reversed to achieve sustainable GDP expansion along with improvement in price situation. “If inflation is high then you begin at a point where growth is low. We need to change this situation. And, I believe that unless we find out the reasons which have led us to such a situation, it is difficult to solve it,” he said.
Jaitley further said the Modi government does not believe in a high taxation regime but is being pro-business and pro-poor at the same time.
Jaitley said there is nothing wrong in being “pro-business” as India wants investments for better economic growth which in turn will lead to job creation and higher revenue for the government. “Unless the government gets revenue, it cannot build infrastructure and service the welfare schemes for the poor. By being pro-business and pro-poor, I am not contradicting but both have to exist at the same time,” Jaitley said.
On retrospective taxation which the last government had brought in thus spooking investors, Jaitley said the imposition of the tax created a negative sentiment about India. “If your taxation policy is so fragile then there is no authenticity to your economic and tax policies. The UPA government had pushed the country to this situation,” he said, adding the present dispensation is not a “high taxation government”.
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