Finance Minister Arun Jaitley has reached out to the States seeking their support to roll out the Goods and Services Tax (GST).
GST is one pending issue on which consensus needs to be built and implementation done at an early date, Jaitley told a pre-Budget meeting with State Finance Ministers here on Monday.
Implementation of GST has the potential to significantly improve the growth (India’s) story, Jaitley said.
The slowdown in economic growth coupled with high inflationary pressure poses a challenge to the macroeconomic environment, he said.
Jaitley highlighted that tax collections are only at 10 per cent of the GDP compared with the initial Budget estimates of 10.9 per cent.
“India can ill afford this trend and I believe that deliberation held today will be the first in the series of such deliberations and we will together steer the economy in the mutually agreed direction”.
The Centre is committed to evolving a model of national development that is driven by the States, Jaitley said.
“We intend to extend necessary flexibility to States in achieving this. I urge the States to be fiscally responsible with this greater devolution of power. Inter-generational equity must be kept in view while deciding today’s spending.”
Essential Commodities Act Jaitley called for States’ support to evolve a mechanism which addresses the structural issues that create supply bottlenecks.
The Centre was committed to breaking the vicious cycle of high inflation and interest rates, he said. “We need to look at the Essential Commodities Act and put in place strict measures and special courts to stop hoarding and black marketing.”
The need for a single agriculture market and real time information dissemination on prices to farmers and consumers are areas which need to be addressed, Jaitley said.
“You will appreciate that these goals cannot be achieved without active cooperation of States. I urge you to address the areas of agriculture extension, public investment in agriculture, including irrigation and agriculture marketing, which falls under your purview. We will be there to support you”.
Jaitley also called for implementing the National Food Security Act in a cost effective and efficient manner for ensuring real ‘food security’.
Restructuring of Food Corporation of India (FCI) for greater efficiency in delivering foodgrains is also on the agenda of the Centre, he pointed out.
Infrastructure development Economic growth can be revived through increased investments in the areas of infrastructure, Jaitley said, adding that States’ partnership was critical in this sphere.
“We have to think big and build an infrastructure which can cater to a growing population in the coming years. Growth of infrastructure will also pull out sectors such as cement, steel and power from the current downturn and will lead to massive job creation”.
A similar approach is also required to modernise the industries in India. “We should no longer remain a market for global industry rather we should become a global manufacturing hub,” the Finance Minister said.