‘We did not want to be very populist and please everyone with tax cuts’

The government’s last full budget before the 2019 elections focused on addressing rural distress, stimulating the economy and creating jobs through enhanced public spending and tax cuts but did not try to please the rich and the big corporations. Finance secretary Hasmukh Adhia, in an interview, explained why. Edited excerpts:

NEWDELHI:

The revenue collection targets for next year will depend on GST to a great extent. Will GST buoyancy improve?

It will depend on compliance improving under GST. With features like e-way bill and invoice matching coming back, there will be buoyancy in tax collections. Once a panel looking into invoice matching is ready with its recommendations, the GST Council will take it forward.

But the eway bill has been deferred because of technological glitches…

Yes, there were technological glitches and we decided not to cause inconvenience to the trade because of that. We have decided to continue with the trial period for some more time. Once we are sure that the system is efficient and e-way bills can be generated within one minute, we will make them compulsory.

Will there be legal changes in the GST framework?

Changes have to be made in the central GST law, state GST law and the integrated GST law. We hope to bring the bills in the second half of the budget session in March.

What was the guiding principle for the budget for next fiscal?

The guiding principle was not to compromise on rejuvenating the rural economy and not to compromise on social security, health and education. We did not want to be very populist and please everyone with tax cuts.

We have seen a progressive rate reduction in corporate tax rates, but what about personal income tax rates? Won’t a cut in personal income tax rates boost consumption?

Not really. Instead of reducing the rate of income tax, it is always a good idea to boost the economy through spending in rural areas where immediately there will be consumption demand. So we decided to boost demand.

There are not many antiblack money measures in the budget. Has the fight against black money taken a back seat?

Not at all. As the finance minister mentioned, because of anti-black money measures, direct taxes have seen very good buoyancy resulting in a bonanza of ₹90,000 crore in two years. Benefit of demonetisation will continue for the next two-three years as notices sent out to depositors will lead to some traction.