The Finance Minister Jaitley said that the IMF has hailed India as a ‘bright spot’, amidst a slowing global economy. The World Economic Forum has commented that India’s growth is ‘extraordinarily high’. He said that it could be achieved inspite of inheriting an economy of low growth, high inflation and zero investor confidence in Government ‘s capability to govern.
The Finance Minister Jaitley further said that CPI inflation which was 9.4% during the last three years of the previous Government had come down to 5.4%. This was accomplished despite monsoon shortfall of 13% for two consecutive years. Calling India’s external situation as robust, Jaitley said that the Current Account Deficit had declined from 18.4 billion US dollars in the first half of last year to 14.4 billion this year, projected to be 1.4% of GDP by the end of this year. India’s foreign exchange reserves are at the highest level of about 350 billion of US dollars.
The Finance Minister affirmed the principle that money with Government belongs to the people and the Government has the sacred responsibility to spend it prudently and wisely for the welfare of people, especially for the poor and the downtrodden. He said that the Plan expenditure at RE stage has been increased in 2015-16 in contrast to the usual practice of reducing it. Jaitley pointed-out three serious implications facing the Indian economy. Firstly, we must strengthen our firewalls against the risks of further global slowdown and turbulence by ensuring macroeconomic stability and prudent fiscal management. Secondly, since foreign markets are weak, we must rely on domestic demand and Indian markets to ensure that India’s growth does not slow down. And thirdly, we must continue with the pace of economic reforms and policy initiatives to change the lives of people for the better.
The Finance Minister said that the Government has also to prioritise its expenditure for the Financial Year 2016-17 on account of the recommendations of 7th Central Pay Commission and the implementation of Defence OROP. Also, the 14the Finance Commission has reduced the Central share of taxes to 58% from 68%. Jaitley said that the government wished to enhance expenditure in the farm and rural sector, the social sector, the infrastructure sector and provide for recapitalisation of banks as these sectors need immediate action.
The Finance Minister Jaitley also said that the Government will undertake three major schemes to help the weaker section of the society. The Pradhan Mantri Fasal Bima Yojana (PMFBY) will help to protect the farmers from the natural disasters. The farmer will pay a nominal amount of insurance premium and get the highest ever compensation the event of any loss suffered. A health insurance scheme which protect about one-third of India’s population against hospitalization expenditure will also be announced. A new initiative to ensure BPL families are provided with cooking gas connection, supported by a Government subsidy, will also be launched.
Jaitley asserted that the priority of the government is to provide additional resources for vulnerable section, rural areas and social and physical infrastructure creation. He said the Government shall also endeavour to continue with the ongoing reforms and ensure passage of Constitutional amendments to enable implementation of GST, passage of Insolvency and Bankruptcy law and other pending reform measures. He also added that the Government shall enact a law to ensure that all benefits given by the government are conferred upon persons who deserve it, by a statutory backing to AADHAR platform. He added, significant reforms like changes in the legislative framework relating to transport sector, incentivizing gas discovery and exploration, enactment of law to deal with resolution of financial firms, legal framework dispute resolution in PPP projects and public utility contracts, important banking sector reforms and public listing of general insurance companies and significant changes in FDI policy are also on Government’s agenda.
The Union Finance Minister Jaitley set the agenda for the Financial Year 2016-17 as ‘Transform India’.