Confident of an accelerated growth trajectory, Finance Minister Arun Jaitley on Sunday said tax revenues are expected to be higher this year while improving macroeconomic fundamentals and ongoing reforms make 8-10 per cent growth “eminently achievable”.
He also said monsoons are progressing well and there are expectations that “rain gods will be kinder” this year, which would result in higher production of pulses and other items.
Monsoon was above normal in June with 25 per cent excess rainfall despite a late arrival and a drought-like prediction and the rest of the monsoon may also be good, he said.
Speaking at the Nabard Foundation Day function here, Jaitley said the “silver lining” is that revenue collection situation is expected to be more comfortable than last year.
He said with the ongoing reform process, proposed GST, increased infrastructure investment and emphasis on smart cities, India can very much achieve 8-10 per cent GDP growth.
“When all these initiatives get onto the field, then our aspiration to cross that 8 per cent level and get on to the 8-10 per cent growth target is not something which is completely out of sight, but is something which may be imminently achievable,” he said.
The Minister said there are “some sporadic data” which indicate a significant recovery and referred to the indirect tax collection during the first quarter of the fiscal.
The data indicates that Customs Duty, Excise Duty and Service Tax, even without additional revenue measures, were up 14.5 per cent over the past fiscal, Jaitley said.
If the additional revenue measures are taken into account, the total indirect tax revenue mop-up has been up 37.5 per cent, Jaitley said, while adding that the nominal GDP growth will be much higher.
Jaitley, however also cautioned the economy also has its owns challenges, while there are “reasons for us to smile” with a growth figure of 7.3 per cent for last year and the projected growth rate of 8 per cent for this year in the backdrop of a slowdown in global economy.
“… There are some indices which give us an image of a macroeconomic stability,” he said.
The Finance Minister further said India is better placed than most other economies.
“On the surface, with various parameters and how the global economy is doing, when we compare ourselves, we may have some opportunity to cheer. Because even in challenging times, we are being looked upon as a brighter spot.”
On the global economy, he said the world is passing through troubled times and the IMF has lowered the global growth rate to 3.3 per cent for 2015.
Allaying fears of any poor monsoon-driven troubles for the farmers and the consumers, Jaitley said the government has taken a number of initiatives. He referred to the recently announced Rs 50,000 crore programme for a national irrigation.
“And I can tell you that this is only the beginning…I am full confident that with the economy likely to move up in the next few years, resources will be available…
“We are fairly clear about the fact that a large part of investment will have to go into agriculture, mitigating this rural distress and indebtedness of the farmer,” he said.