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FM confident of 6% growth this fiscal

UPTICK: Plans to replace subsidy for cooking gas by a direct cash transfer

Written by ENS Economic Bureau | New Delhi | Published: April 7, 2013 1:13:19 am

Finance minister P Chidambaram today exuded confidence that the economy will grow by 6 per cent or “a little over 6 per cent” in the current financial year while the fiscal deficit for 2012-13 will be better than the revised yearly target of 5.2 per cent.

The government also soon plans to replace the existing subsidy for cooking gas by a direct cash transfer to the people,he said. In a press conference just days after returning to Delhi after a long road show in South Africa and Japan,the finance minister picked up a wide range of economic issues the government plans to move on this financial year. Chidambaram was spelling out in detail the announcement made by Prime Minister Manmohan Singh this week at CII that the government will be moving on several reform issues promptly.

The direct cash transfer,Chidambaram said,will mean households with LPG connections will get money in their accounts for the subsidy of about Rs 4,000 per year. This will replace the current mechanism of reimbursing the oil marketing companies by the government. He said he will meet petroleum minister Veerappa Moily in this connection,soon.

The minister also claimed the revenue collection target for the year has been achieved and some savings from expenditure is expected,there is a likelihood of fiscal deficit being better than projected.

“In the indirect taxes,there was excess over the target. In the direct taxes,there was a shortfall over target. But overall we have achieved the target of over Rs 10.38 lakh crore. This is 16.7 per cent over the actuals of previous year… Revenue target of 2013-14 is achievable because we believe GDP will grow by 6 per cent or a little over 6 per cent,” he told reporters in a press conference.

From the direct taxes,collection stood at Rs 5,65,825 crore while from the indirect taxes it stood at Rs 4,69,546 crore during 2012-13.

Hit by slowdown,the economy is projected to grow at 5 per cent rate during 2012-13,lowest in ten years,as per the Central Statistical Organisation (CSO) data. The previous low at 4 per cent was recorded in 2002-03 and ever since the economy has been expanding at over 6 per cent,the highest rate being 9.6 per cent in 2006-07.

As a result of declining exports and widening trade deficit,the current account deficit (CAD)has widened to a record high of 6.7 per cent in the quarter ending December 2012. Chidambaram said the CAD in the fourth quarter of 2012-13 will be much smaller while it will be “more tolerable and acceptable” for the full fiscal. Though at the same time,he emphasised that the exports will have to be increased while ensuring that unnecessary imports don’t take place.

“The Q4 number,(from) whatever RBI has been able to capture,will be much smaller and the number for the whole year will be more acceptable,more tolerable,” he said. During April-December 2012,it stood at $71.7 billion accounting for 5.4 per cent of GDP as against $56.5 billion or 4.1 per cent of GDP,in the same period of 2011.

Concerned over the huge CAD,earlier during the week Prime Minister Manmohan Singh had said that the expected CAD of around 5 per cent of GDP during the year “is more than twice the traditional comfort level of say 2.5 per cent.”

On the Insurance Amendments Bill,he said that discussions with the main Opposition party. The bill proposes to raise FDI cap in the insurance sector to 49 per cent from the current 26 per cent.

“I will meet them once again in the run-up to the session. They told me that they are holding internal consultations within their party. Once the principle opposition party indicates its mind we will certainly consult other parties also,” he said. The Budget session of Parliament will resume on April 22.

Highlights of the FM’s conference

* GDP growth to be over 6% in 2013-14

* Revenue target for FY13 met

* Fiscal deficit to be better than 5.2% in FY13

* CAD for the fourth quarter of FY13 to be much lower

* Sugar decontrol to add Rs 2,500-2,600 crore to subsidy burden

* CCI to take up 31 projects on oil and gas sector in April meeting

* 50 lakh more people filed return in FY13

* Govt to amend I-T Act after resolving Vodafone tax dispute

* Discussion on to move LPG subsidy to direct cash transfer

‘Changes in I-T Act after Vodafone resolution’

The finance minister has said that the Income-Tax Act,1961,will be amended once the tax dispute with Vodafone is resolved.

“My proposal is lets find a possible solution to the Vodafone dispute and then go to Parliament with the amendment saying this is the possible solution that we have been able to arrive at tentatively. Please amend the Act so that we can implement it,” he told reporters. But he said that an amendment was unlikely in the ongoing session.

He said,“Once the comments are received on the Cabinet note,it will go to the Cabinet.” ENS

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