Finance minister Arun Jaitley on Thursday gave a strong indication that the February 1 interim Budget may not necessarily be a vote-on-account, emphasising that the government could deviate from an election-year convention to meet challenges confronting the economy, like the one facing the farm sector.
His address, at an award function organised by a TV channel, through a video link came against the backdrop of speculation on whether he would be able to present the Budget. Jaitley has gone to New York for a medical check-up, but during in the interaction, he dropped no hints that he would be unable to perform the crucial task .
Invoking compelling national interest, as well as precedent, Jaitley said it might become necessary to address some of the worries confronting the economy. “Convention has always been that election year Budget is an interim Budget. The larger interest of the nation dictates what will be a part of the interim Budget,” he said at an award function organised by a TV channel.
He suggested that issues confronting the farm sector would constitute one such challenge, which can cause the government to take a detour of convention and pointed to the problem of high production and slower rise in prices of key agriculture products.
The reference to the farm sector is seen to be crucial as the government is under pressure to announce measures for the sector which is linked to more than half of the population but accounts for less than a fifth of the GDP. In recent weeks, there has also been buzz of tax cuts for the middle class and other measures in the government’s economic statement ahead of Lok Sabha polls.
However, the FM made it amply clear that the government will stick to its path of fiscal prudence. “I have always believed that fiscal discipline is always rewarded… In the past when governments have not stuck to it, we have seen the consequences,” the minister said. But he also added that in “unusual situations”, a deviation from the fiscal consolidation path might be required, which was understood by the markets and analysts.
The statement comes amidst mounting demands for a national farm loan waiver, something that the Narendra Modi administration has so far steered clear of.
He also identified stepping up the growth rate to 8% and addressing the aspirations of the Indian population as challenges facing the government. But Jaitley said the problems could not be addressed through “negative politics”. He added that the “nawabs of negativity” may come together but they wouldn’t hold together or have enough credibility.
For a “weak and fragile combination, survival is the priority and policy probably comes very low down in the priority… As we get to the general elections, India needs to have continuity in policies, stability and decisiveness,” he said in reference to attempt by opposition parties to come together to fight the polls.
Asked on a reduction in interest rates amid slowing inflation, Jaitley suggested there was need for RBI to pare policy rates without making an explicit comment.
“We can’t have real interest rates (after budgeting for inflation) higher than anywhere in the world,” he said, adding that the central bank has begun consultations with stakeholders.
In the backdrop of the recent public acrimony between the government and RBI, which saw Urjit Patel’s resignation nine months before the end of his term as governor, the minister said that the central bank and the Centre have often had different points of view but it has been resolved through consultations.
Source : PTI