After demystifying the credit policy of the RBI, it is the finance ministry’s turn to have a relook at the age old practice of linking all major economic decisions to the Budget.
At the Ficci AGM on Friday, Finance Minister Jaswant Singh said that the economy was too serious a matter to be budget-centric and a constant and year-long attention was required to ensure a higher growth.
In fact, the FM said that the ‘mid-term review’, task forces reports on both indirect and direct taxes and the passage of a number of legislative bills in Parliament in the last three weeks are all efforts to span economic activities over the year instead of just limiting them to the Budget.
According to Singh, “I do believe that constant and year-long attention on all economic issues with the broadest possible public participation should take place.” Stating that the government’s effort would be to make the budgetary process transparent, Singh said that that Budget exercises alone cannot bring about any remarkable change in the tax to gross domestic product (GDP) ratio.
“What can make the difference is modernisation of the tax collection machinery and a complete evasion of irritants that accompany this interface of officials and taxpayers,” Singh said.
In fact, according to the FM, the Kelkar committee reports on both direct and indirect taxes aimed at doing just that. “For the first time we suggested outsourcing of bureaucratic work but unfortunately that point did not get much attention in the debate”, Singh said. According to the FM it is true that such issues do not have the same ‘sex appeal’ as tax rates do but it should have been noticed by more people.
The FM stressed that a constant and year-long attention on all economic issues with the broadest possible public participation should take place. “The issues that confront us are far too complex and the potential we have is too great to be reduced to endless arguments about percentage changes in incidence of tax or interest rates,” he said. “There are vast spaces in our economic life today that need focussed and serious attention, innovative ideas and rapid technological progress,” he added.
Singh said that industries such as steel, textiles, pharmaceuticals and biotechnology should get priority. Pointing out that other challenge is to give adequate attention to agriculture, he said that food and agro-processing sector is critical in this regard. Singh also said that tourism and housing sector, too, must receive encouragement as these are the areas of huge potential, which will yield early returns in terms of impacting growth of employment.