Just two days before the 50-day demonetisation deadline, Prime Minister Narendra Modi on Tuesday met the economists at Niti Aayog and sought their views for the forthcoming Budget on areas such as job creation, agriculture, skill development and education. He also underlined the need for engaging the youth for speeding up economic development in the country and said that advancing the date of Budget presentation would help getting funds authorised for different sectors at the start of the financial year.
Economists on their part favoured simplification and reduction in personal income tax rates and harmonisation of customs duties to global levels in a bid to boost economic activities. “Tax simplification figured quite a lot...On the direct taxation, both corporate and personal income tax on simplifying, reducing exemptions, bringing down tax rate and aligning tax system to make India competitive with international destination,” said Niti Aayog Vice-Chairman Arvind Panagariya.
The mandate comes up at time when the Government wants some concrete suggestions to neutralise the adverse impact of demonetisation since November 8 and push growth with special focus on employment generation and promote farm productivity as well.
Addressing some eminent economists at Niti Aayog’s meeting on ‘Economic Policy - The Road Ahead’, Modi said that a change in the Budget cycle would have an impact on the real economy.
“The date of Budget presentation is being advanced so that expenditure is authorised by the time the new financial year begins,” the Prime Minister said.
During the meeting with the Prime Minister, economists shared their views on various themes such as agriculture, job creation, taxation, education, digital technology, housing, tourism, banking, governance reform, data driven policy and future steps for growth.
The meeting was attended by Finance Minister Arun Jaitley, Niti Aayog Vice-Chairman Arvind Panagariya, and senior officers from the Union Government, among others. The economists and experts who were present included Pravin Krishna, Sukhpal Singh, Vijay Paul Sharma, Neelkanth Mishra, Surjit Bhalla, Pulak Ghosh, Govinda Rao, Madhav Chavan, NK Singh, Vivek Dehejia, Pramath Sinha, Sumit Bose and TN Ninan.
During the brain-storming discussions, sources, however, said the experts in farm sector suggested incentivising States to undertake market reforms, create corpus fund for promoting farm mechanisation and micro irrigation, and provide interest subvention for term loans, among others, to double farm income by 2022.
Just after the meeting, Niti Aayog Vice-Chairman Arvind Panagariya briefed the media, saying that the Prime Minister called for growth in three important sectors - agriculture, job creation for youth and skill development.
As far as forthcoming Budget is concerned, the Government is proposing the 2017-18 Budget on February 1 instead of the regular date of February 28. Also, there will be no separate Railway Budget for the next fiscal as the Government has decided to merge it with the General Budget.
However, the Prime Minister said under the existing Budget calendar, the authorisation of expenditure comes with the onset of the monsoon which results in the Government programmes remaining relatively inactive in the productive pre-monsoon months.
In his intervention, the Prime Minister also thanked various participants for their suggestions and observations. In particular, he called for innovative approaches in areas such as skill development and tourism as well.
Keeping the future growth prospect of the country, the meeting just before Budget, however, played significant role in view of various multilateral agencies and Reserve Bank of India (RBI) lowering growth outlook for the current fiscal. The central bank has reduced the forecast to 7.1 per cent from 7.6 per cent in its monetary policy review earlier this month.
Multilateral funding body Asian Development Bank (ADB), too, slashed growth projection to 7 per cent for the current fiscal, from its earlier 7.4 per cent due to the impact of cash recall on economic activities. Indian economy expanded by 7.1 per cent and 7.3 per cent in first and second quarters of 2016-17, respectively.