Focus on boosting growth and a debate on whether or not fiscal targets should be eased formed part of the pre-Budget discussion of economists with Finance Minister Nirmala Sitharaman Friday. The economists in their meeting also stressed on the need to promote labour intensive sectors and manufacturing through Make in India, further simplification of GST, Insolvency and Bankruptcy Code (IBC)-type framework for NBFC sector, implementation of Direct Tax Code and constitution of independent fiscal policy committee, a Finance Ministry statement said.
S Mahendra Dev, director, Indira Gandhi Institute of Development Research, said the discussion focused on growth and jobs. “The fiscal policy and monetary policy need to be improved. Some people asked the sanctity of FRBM, whether it can be relaxed. Some were of the opinion that fiscal space isn’t there. For monetary policy, transmission of interests are not taking place. Banking system should be stabilised. The Budget should be growth-oriented. PM Kisan and all being done, concentration should be on growth. Coming to jobs, value chains need to be improved,” Dev said.
Former Chief Economic Adviser Arvind Virmani suggested GST simplification and labour reforms can help attract investment. “Make in India manufacturing is a once in a generation opportunity. Tax reforms were some of the things one can do. Cross-border ease of doing business has not improved. GST simplification, labour reform can help attract investment,” he said.
The meeting was attended by NITI Aayog Vice-Chairman Rajiv Kumar, Finance Secretary Subhash C Garg, Revenue Secretary Ajay Bhushan Pandey, Chief Economic Adviser K V Subramanian and other senior officials of the Ministry of Finance.
Other economists who attended the meeting included NIPFP chief executive and director Rathin Roy, SBI chief economist Soumya Kanti Ghosh, Aditya Birla Group chief economist Ajit Ranade, and former RBI Deputy Governor and economist Rakesh Mohan among others.
Manoj Panda, director, Institute of Economic Growth, said agriculture must be liberalised and subsidies should be rationalised, otherwise budgetary burden cannot be managed. “I am telling for recalibration of subsidies, to protect the interests of the farmers. Like direct benefit transfers. Current regime of subsidies add to exchequer and is inefficient at the crop level, distorting market prices,” Panda said.
Economists further gave suggestions on tariff reforms, removing bottlenecks in supply-chain, EXIM policy for agriculture, removal of specific duties on textiles, maintaining fiscal consolidation, revival of inter-state councils for holistic domestic growth, boosting employment by focusing on skilling and giving fillip to services and manufacturing sector.
Earlier in the day, Sitharaman also held a meeting with representatives of social sector, wherein they suggested the government should focus on education, hygiene, women safety and nutrition of infants in the forthcoming Budget. They also asked the Minister to levy higher taxation on sweetened and salted products, rationalise taxes on medical devices, earmark funds for healthcare infrastructure, and provide free drugs as well as diagnostic facilities.
Sitharaman, in her opening remarks, said that the present government is committed to improving educational standards, skilling the youth, enhancing job opportunities, reducing disease burden, empowering women and improving human development in order to have an inclusive development. The main areas of discussion included issues relating to health, education, social protection, pensions and human development.
They also suggested expansion of healthcare infrastructure, provision of free drugs and diagnostic facilities, rationalisation of taxes on medical devices, promotion of public private partnership in secondary and tertiary healthcare sectors, fiscal incentives for recycling of waste water and rainwater harvesting, among others.
National Commission for Women chairperson Rekha Sharma, Centre for Policy Research president Yamini Aiyer, Helpage India chief operating officer Rohit Prasad, and National Commission for Protection of Child Rights chairperson Priyanka Kanoongo attended the meeting.