GDP growth set to top 7.5%, tax collection to fall short: FinMin

The government said on Monday that the economy would grow at 7.5% or more in 2015-16 despite a weak monsoon and a potential shortfall in tax collection. Finance minister Arun Jaitley had in his budget speech, projected a growth rate of 8% to 8.5% for the year.

However, it was on course to hit the fiscal deficit target of 3.9% for the year.

“Traditionally, fiscal consolidation is accompanied by a growth slowdown, but we have simultaneously improved the quality of expenditure and redeployed resources saved by restructuring various schemes, including subsidy reform,” said RP Watal, finance secretary at a press conference.

Shaktikanta Das, secretary, department of economic affairs, Hasmukh Adhia, revenue secretary and Arvind Subramanian, chief economic adviser among others were also present at the press conference.

Watal said there has been a 10% rise in tax devolution to the states and a 30% increase in the planned capital expenditure.

“To give adequate time to the ministries and departments to reform their financial processes, this year the pre-budget exercise has been advanced by two months to ensure structural reforms on the expenditure side can be completed in time for the Budget,” Watal said.

CEA Subramanian said growth projections would be re-evaluated once the second quarter data comes out.

Das said that after the recent 50 basis point repo rate cut by the RBI, banks have started reducing their lending rates. “This should have a positive impact on various sectors including housing and automobiles,” he said.

However, banks are autonomous and would take their own decisions on their lending rates.

PTI Finance secretary RP Watal with Shaktikanta Das, DEA secretary, on Monday Likely GDP growth for 2015-16; the budget had projected 8% to 8.5% Disclosures under the black money window received by the government, revised up from 3,770 cr No of requests...