India will remain one of the fastest growing major economies and achieving 7-8 per cent growth is ‘natural’ for Asia’s third largest economy, Union Finance Minister Arun Jaitley said on Wednesday. “I think for India to achieve the growth rate of 7-8 per cent is logically plausible,” Jaitley said at the 23rd Conference of Auditors' General of Commonwealth Countries and British Overseas Territories here on Wednesday. “If big growth returns to the world, we probably can push upwards," he added.
The country's economy grew 7 per cent in October-December, the pace decelerating from the previous quarter’s revised 7.4 per cent expansion. The minister said he expects the agriculture sector to grow at 4.5 per cent this year.
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Jaitley added that the government would focus on two important areas -building infrastructure on war footing and substantial expenditure on development of rural India.
The Finance Minister said India has the largest infrastructure creating programme in the world which includes constructing 10,000 km of road every year or 30 km a day, connecting every village with a regular road by 2019, to ensure that every village is electrified by 2018 and addition of 40-50 regional airports besides modernising the railway system among others.
Fiscal deficit for the next financial year is aimed at 3.2 per cent, but it will continue to decline after a slight pause, Jaitley also said, adding both current and fiscal deficits are under control. The inflation is also near the 4 percent target, he added.
The Monetary Policy Committee aims to bring headline inflation closer to a previously announced target of 4 per cent on a “durable basis and in a calibrated manner”, Jaitley said. Retail inflation in February had hit a four-month high of 3.65 per cent. India’s banking sector is also expected to improve in the next few quarters, he said, adding that private sector investment, which is currently constrained owing to the banking system, needs to increase.
Meanwhile, Jaitley reiterated the government’s plans to roll out the proposed Goods and Services Tax from 1 July, which he said will replace the “most complicated tax system in the world” with “one of the simplest tax systems.”
“There will be a seamless transfer of goods and services across the country,” he said.
Earlier this week, the Union Cabinet had approved four key Bills that will pave way for the implementation of the uniform tax that will subsume all state-level levies. “The laws which enable this are now before Parliament, which hopefully should get cleared and once they do get cleared, then by the middle of this year we hope to see the implementation,” Jaitley added.
India is also trying to make direct tax rates comparable to international levels, the minister said, adding that the government is making efforts to reduce corporate tax to 25 per cent.
