FM hints at bold decisions in budget to revive economy

NEW DELHI: Hinting at “bold decisions” to revive India’s sagging growth rate in the coming budget, finance minister Arun Jaitely said on Tuesday that a choice must be made between fiscal prudence and mindless populism.

“If you indulge in mindless populism you burden the exchequer,” the minister said at a function of Institute of Chartered Accountants of India.

He said the high fiscal deficit and inflation are the two main challenges before the economy that need immediate redressal. Challenges arising from the Iraq crisis and the possibility of a sub-normal monsoon are other issues threatening economic revival, he said.

Jaitley said the legacy from the previous government was nothing to be jealous of. “We had two years of sub-5% growth and loss of confidence…tax buoyancy is down,” Jaitley said.

The silver lining was the improving current account deficit, he said, adding that India, which was falling off the global agenda, is back on track. “The responsibility lies on us to respond to this opportunity.”

Inflation touched a five-month high of 6.01% in May. If rains are below par, prices could inch further upward.

A stable tax regime is a must, he stressed. “The fact that the world suspects we don’t have a stable tax regime itself has dissuaded investors,” he said. “Just as policy paralysis was unknown to our governance vocabulary, the new addition, which I have read in comments from independent observers, is tax terrorism.”