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Tuesday, October 06, 2015

8% growth, rationalization of Central schemes, appointment of bank CMDs – what top 3 finance ministry secretaries had to say

Adhia (left), Watal during the press meet
FINANCE ministry top bureaucrats on Monday talked about the health of Indian economy: A possible 8% growth, government’s role in passing over benefits of RBI’s soft monetary policy, 5% fall in direct tax collection, rationalization of Central schemes and revamping the process of selection of directors, CMDs of public sector banks, among others. The bureaucrats who participated in the press meet included finance secretary and 1978 batch IAS Ratan P Watal, DEA secretary and 1980 batch IAS Shaktikanta Das, revenue secretary and 1981 batch IAS Hasmukh Adhia, Chief Economic Adviser (CEA) Arvind Subramanian, among others. Here are 10 things which the top North Block bureaucrats had to say:

1. Indian economy should over time realize its 8 percent plus growth potential.
2. The government and the RBI will work together to consolidate the gains achieved in inflation control. After all, CPI inflation is within the target zone, and WPI inflation has been negative for 10 consecutive months.
3. The government will play its part to ensure the benefits of accommodative monetary policy are transmitted to the economy at large. In fact, the RBI recently announced a 50 bps cut in the policy rate, bringing the cumulative support of Monetary Policy to 125 basis points this calendar year. This should boost confidence and investment, and help shore-up the corporate balance sheets. (BoI Take: SBI’s unwillingness to pass over the benefits to end customers is widely criticized by experts, and in press)
4. We continue to work together on rationalizing central sector schemes and programmes in run up to the Union Budget 2016-17. To give adequate time to the ministries/departments to reform their financial processes, this year the pre-Budget exercise has been advanced by two months to ensure structural reforms on the expenditure side can be completed in time for the Union Budget 2016-17.
5. On subsidy reforms- diesel, petrol and LPG now sell at market prices throughout the country.
6. The financial health of Dis-coms has received the highest attention of the government. We are working with the power ministry and the states to find a lasting solution to this problem, in a manner that ensures the gains of fiscal consolidation made over the 12th and 13th Finance Commission periods are maintained, while preparing a financial restructuring plan that incentivizes Dis-coms to generate more revenues, and close the gap between average cost of supply and the revenues raised on sustained basis.
7. If no other externality hits us, we are hopeful of achieving the total taxation target with possibility of a minor shortfall of around 5 percent within the total target of Rs 14.5 lakh crore.
8. Our broad approach to taxation is as follows: a) Non-adversarial (less litigation), b) Lower tax burden and fewer exemptions, c) Strengthening mechanisms for Advance Pricing Agreements, Authority for Advance Rulings and Settlement Commission, d) Minimum direct interface of assesses with tax administration by using more and more, the facilities of e-filing, e-processing, e-refunds etc., e) Simplification of laws, rules and notifications.
9. The government has undertaken a set of reforms which include revamping the process of selection of directors on the boards of Public Sector Banks, laying of a road-map for a transparent and objective selection process for directors, separation of the post of non-executive chairman and managing directors (CMD), etc.
10. We are in the process of setting-up a National Infrastructure Investment Fund (NIIF) that will channelize both domestic and foreign resources to satisfy the infrastructure needs of our economy.

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