Parthasarathi Shome in Calcutta on Saturday. Picture by Kishor Roy Chowdhury
Calcutta, March 9: The Centre hopes to clock a tax revenue growth of 19 per cent next fiscal, aided by better economic growth and additional revenue measures.
According to Parthasarathi Shome, adviser to finance minister P. Chidambaram, tax revenue collections could grow 17 per cent by the close of the current fiscal.
Further, he said, what India required now was a good credit rating to strengthen growth.
“This year we are likely to have a 17 per cent growth in tax revenue. Next year, with a higher rate of growth, we can certainly expect about 18 per cent tax revenue growth. Since we have taken some additional revenue measures or ARMs in the budget, if we add to the 18 per cent, you come to about 19 per cent growth. We will have to wait and watch,” Shome said.
He was speaking in Calcutta at a session on “Understanding Union Budget 2013-14”, organised by St. Xavier’s College and MCC Chamber of Commerce and Industry today.
“Every budget has a focus. This budget we focused on fiscal balance. In order to correct our current account deficit, we need foreign capital inflow and stop capital outflow. We need a good international rating from agencies who follow closely the current account deficit and fiscal deficit in the economy. Industry has been hurting and so selective incentives have to be provided,” he said.
Global rating agency Moody’s recently applauded Budget 2013-14 saying it pursues realistic fiscal consolidation path and is “credit positive”.
“India’s budget pursues realistic fiscal consolidation, a credit positive for the sovereign,” said Moody’s.
Incidentally, Standard & Poor’s had threatened to downgrade India’s sovereign credit rating last year citing the unimpressive state of economic reforms and not-so-conducive investment climate.
He said the government had seen a rising trend in growth and there was a possibility to make up for the growth in the fourth quarter.
“The government has taken the right measures in the budget by giving attention to various interests. This will bring some succour to those paying more tax only on account of higher inflation. We compensated the fiscal drag by taxing the over Rs-1-crore income group. The intention is to do it temporarily. Also,construction and manufacturing need a special impetus. People thought service tax and excise would go up. But that did not happen,” he added.
The marginal rates of taxation on the super-rich income brackets were higher in countries such as Chile, China, the UK, Germany and South Africa.
Shome said the budget had done well to increase the excise on SUVs. “This should have been done before.” Other countries tax large cars heavily, he said.
The finance minister has pegged the fiscal deficit at 4.8 per cent in 2013-14. GDP growth has slowed down to 4.5 per cent in the third quarter. “International rating agencies are projecting a higher growth for India now. But we are cautious,” he said.