Relief package soon to boost economy: FM to India Inc

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SME Times News Bureau | 21 Sep, 2017
Finance Minister Arun Jaitley on Wednesday hinted at a package of measures to boost the economy, while virtually ruling out any cut in duties on petroleum products to check the spike in fuel prices.

"We have taken note of all the economic indicators that are available. This has been a pro-active government on the reforms agenda. Over the last two days, I have had a series of discussions with ministerial colleagues and various secretaries.

"The government will take additional measures in the coming days after consulting the Prime Minister. Whenever the measures are taken, you will come to know of it," Jaitley told reporters here following a meeting of the union cabinet.

On Tuesday evening, the Finance Minister chaired a high-level meeting to review the economic situation and discuss measures, including a possible stimulus package, to be taken amidst an economic slowdown.

The meeting was attended by, among others, Railway Minister Piyush Goyal, Commerce Minister Suresh Prabhu, Chief Economic Advisor Arvind Subramanian and Secretaries in the Finance Ministry -- Ashok Lavasa, Subhash Chandra Garg, Hasmukh Adhia, Rajiv Kumar and Neeraj Kumar Gupta.

Originally, the review was to take place with Prime Minister Narendra Modi's participation.

On the current high transport fuel prices, Jaitley said it was a temporary spike in global prices caused by the supply-demand mismatch due to hurricanes that hit the US coast.

Asked about the possibility of a cut in excise duties on petroleum products, he said government needed money for public spending to push growth and for social sector schemes.

"States are taking so much tax... earlier under the fortnightly pricing regime, when two years back we lowered fuel prices, states like Delhi, Haryana would immediately raise VAT to earn more money. States under the Left and Congress should take steps to lower cesses," he said.

Referring to opposition about price-rise, Jaitley said the parties which kept quiet when inflation was in double-digits, were now crying when it is at 3.3 percent, which is within the RBI mandate of keeping inflation under 4 percent.

"During monsoon, there is normally a spike in vegetable prices and inflation is still at 3.36 percent," he added.

Jaitley's high level meetings follow a sharp fall in latest key macro indicators such as the Gross Domestic Product (GDP) and industrial production, as well as a widening Current Account Deficit.

Pulled down by sluggish manufacturing, growth in the Indian economy in the first quarter of this fiscal fell to 5.7 percent, clocking the lowest GDP growth rate since Prime Minister Modi assumed office in May 2014.

The August consumer price index (CPI) inflation in India shot up a full one percentage point to 3.36 percent, from 2.36 percent in July, led by a spike in food prices.

The Index of Industrial Production (IIP) in July rose by 1.2 percent as compared to the same month of last year. It had declined by (-)0.1 percent during June this year.

Regarding the technical glitches that have plagued the digital filing of GST returns by businesses, Jaitley blamed it on last minute rush to meet the deadline.

"A lot of the GST problem is self-invited by assessees. For example, today (Wednesday) is the last date for filing returns (July), but till last night only 25 percent had paid their taxes," he said

"So, if 75 percent of people wait till the last day, the system is bound to crash... its capacity is 1 lakh per hour or 24 lakh through the entire day. Till last night, there was no problem," he added.