“We will discuss and take a call on how to borrow and solve the income deficit (GST). We have given you two options. If they are not acceptable to them, we will discuss it and find a solution. But that doesn’t mean we don’t want to compensate, “Sitharaman said in responding to the discussion about the first batch of supplemental grant claims for Fiscal Year 21.
However, Sitharaman ruled out compensating the Indian Consolidated Fund states arguing that there is no such provision in the law. “We are in talks with the states. We do not repudiate any state. We are taking all states and the GST Council will take a final opinion. Center is not breaking its promise to compensate, “he added.
Finance Minister Nirmala Sitharaman had on Monday requested Parliament’s approval for additional spending on ₹2.36 trillion in fiscal year 21 to cover rising expenses due to the coronavirus pandemic. The first batch of supplementary grant applications for the current financial year involves an additional budgetary burden of ₹1.67 trillion while around ₹Rs 69 billion will be covered by savings from various departments.
“Supplemental grant claims should not be viewed as a technical document. It is a letter for self-reliance, “said BJP leader Jayant Sinha during the debate on the supplementary demands.
Tacitly explaining the government’s cautious approach against providing a large fiscal stimulus, Sitharaman said that the government is not contemplating an increase in tax rates to cope with increased spending like some developed countries that have given a stimulus equivalent to 15 % of GDP. “The pandemic still prevails. We don’t know when a vaccine will arrive. We have a national security situation in Ladakh. However, we have not reduced transfers to the states, “he added.
Sitharaman said that the total transfer to states increased 19% this year. “We have transferred 107% of the gross tax revenue to the states, while the expenses of the center are covered with loans. That’s the truth. We are also sending transfers to the states, “he added.
Holding that the fundamentals of the economy remain strong despite the pandemic ravaging the economy, Sitharaman said that the country has a record of foreign reserves, FDI inflows have increased while potential retail investors have opened a record number demat accounts during closing.
The Indian economy contracted to a record 23.9% in the June quarter after the government imposed a nationwide shutdown on March 25, forcing companies to jump-start their operations as demand plummeted as consumers plunged. they stayed home. Most forecasters now expect the economy to contract in double digits in fiscal year 21, as the coronavirus pandemic continues to spread rapidly in Asia’s third-largest economy, hurting consumer confidence.
Speaking at the Asian Development Bank’s 53rd virtual annual meeting on Friday, Sitharaman said that like many countries in the Asia-Pacific region, India entered 2020 with confidence associated with a strong track record of economic growth. “As the Covid-19 pandemic unfolded bringing enormous challenges to the healthcare system, and preventive measures to contain the spread of the virus introduced obstacles to normal economic activity, the growth program in countries around the world, including India, had to take a break. A health crisis led to an economic crisis from which no country was affected, “he added.
As our country has begun to gradually unblock itself, the evolution of the economic situation is continuously monitored and evaluated. The Government is taking all possible fiscal, monetary and administrative measures to deal with and emerge from the situation, and to allow the economy to function to its full potential again.
In a statement released in Parliament, the Finance Ministry said on Friday that it cannot present a Medium Term Spending Framework with moving indicative spending targets for fiscal year 22 and fiscal year 23 as required by the FRBM Act because it cannot reliable projections can be obtained. of GDP growth at the moment due to the continued impact of the COVID-19 pandemic on the Indian economy. “Union government spending in the medium term is determined in part by GDP growth, as public spending will have to replace any slack in aggregate demand from the non-government sector. Determining spending based on a non-robust estimate of GDP has the danger of keeping the economy below its true growth potential. An emerging economy like India cannot afford to be below its growth potential for long, “he added.
Gireesh Chandra Prasad contributed to the story
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