Finance Minister Arun Jaitley on Monday said the Centre and States need to work together to roll out GST, address supply side bottlenecks and take strict steps to check hoarding and black marketing to tame inflation.
Addressing the pre-Budget consultative meeting of state Finance Ministers, he also underlined the need to break the vicious cycle of high inflation and high interest rates.“Mandate of 2014 clearly spells out that economic growth cannot be compromised at any cost and is sine qua non to reap the benefits of the demographic dividend,” he said, adding that there is a need to “round off corners” towards GST implementation.
Finance Minister of several States demanded that the Centre address issues pertaining to compensation on account of revenue loss following roll-out of GST, which is being touted as the most significant indirect tax reform.Talking to reporters after the meeting, Gujarat Finance Minister Saurabh Patel said: “Most of the States have said that employment and infrastructure should be given priority and how to increase revenue of the States.”
Jaitley during his address to state FMs said: “States must complement each other in managing the economy and fiscal policy, which is the essence of cooperative federalism. In doing so (we) must act like a team.”He said that while aiming for high growth, fiscal discipline should not be compromised, he added.He also emphasised the need for states to address supply side bottlenecks to manage inflation.
Retail inflation has touched a three-year high of 8.59 per cent in April, and the WPI inflation was 5.7 per cent.Earlier in the day, President Pranab Mukherjee said curbing food inflation was topmost priority of the Narendra Modi-led Government at the Centre.Jaitley, who is holding pre-Budget meetings with different stake holders, said it is the policy of the new government that “Team India” will not be limited to the Government sitting in Delhi but will also include states as equal partners in the growth.
“Discussions held today will be of immense help to the government in giving contours to the Budget proposals to be presented before the Parliament,” he said.Referring to recent data, he said the manufacturing sector has had an abysmal performance last year and the investment cycle has been disturbed.“The negative sentiment has affected trade, hotels and transportation sectors which are posed for a slower growth compared to last year,” Jaitley said.
The slow-down in economic growth coupled with high inflationary pressure, he said poses a challenge to the macroeconomic environment.He said tax collections are only at 10 per cent of the GDP compared to the initial budget estimates of 10.9 per cent.“India can ill afford this trend and I believe that deliberation held today will be the first of the series of such deliberations and we will together steer the economy in the mutually agreed direction,” he added.
Jaitley further said his Government is committed to evolving a model of National Development which is driven by the States and “we intend to extend necessary flexibility to States in achieving this. I urge the States to be fiscally responsible with this greater devolution of power”.On National Food Security Act, he said the need of the hour is to implement the law in a cost effective and efficient manner for ensuring real “Food Security”.
He also stressed on importance of effective PDS as a vehicle to shield the poor from price rise and restructuring Food Corporation of India for greater efficiency in delivering food grains.