The Chief Economic Advisor to the finance ministry, KV Subramaniam, has indicated growth revival continues to be the top priority for the government and to achieve this, some compromise on the fiscal deficit target should not be a major concern.
In an exclusive interaction with CNBC-TV18, the CEA said, “That is the delicate balancing act that one has to do but at different points in time over short periods, priorities have to actually be dynamically looked at, and as I have already highlighted at this point in time, growth remains actually the most important. “
Explaining the growth-deficit trade-off, the CEA said, “ Therefore while keeping the impetus on growth , there are other steps, for eg on disinvestment, together with the extraordinary dividend that has come from the Reserve Bank, which will also help in making sure that we keep our eyes on the fiscal deficit as well, but I would say that at this point in time the recognition is there that we need to do all that it takes to bring the economy back on the high growth path.“
KV Subramaniam also said cooperative banks will not be covered under the bankruptcy code, even while the government plans to bring some categories of financial institutions under the existing code. While systemically important banks, insurance companies, maybe even the big NBFCs, could be covered under a revised FRDI Bill which the government is mulling on.
He told CNBC-TV18 “Cooperative banks are regulated by States and RBI, this has to be thought through. Aspects relating to the banking sector and cooperative banks should not be clubbed together, and it’s difficult to club cooperative banks with other banks as they are regulated by two different entities”
On being asked if there’s any proposal to hike GST rates on some products to achieve revenue neutrality, he said it’s important to take stock of GST and the recently constituted government committee “will look into all aspects of GST and the recalibrations. There’s an opportunity for simplifying things and making them more efficient. The need was felt for a comprehensive look at GST, all aspects including rates will be looked into.”
Dr Subrmaniam also said the task force report on direct taxes will be made public “at the opportune time” and that the recommendations are under “serious consideration “ of the government. On being asked about the likely timing for implementing the recommendations which essentially talk of a major change in the personal income tax slabs and a new modified assessment scheme for expanding the tax base, the CEA said that’s a call to be taken by the Finance Minister Sitharaman.
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