Customs overhaul to be focus in next set of reforms: Finance Minister Nirmala Sitharaman

New Delhi: Finance minister Nirmala Sitharaman on Saturday exuded confidence that the economy will expand at 7% or more in the current fiscal year, sustaining recent quarters’ growth momentum, and that the rupee will “find its own way” against the dollar.

The latest currency depreciation shouldn’t be seen in isolation but in the broader context of the economy’s robust performance despite strong external headwinds, she underscored.

Sitharaman was speaking at an event in the capital.


The rupee fell below the psychological 90 per dollar mark this week, before settling at 89.98 on Friday, down about 5% this year.

Drawing a contrast between the rupee depreciation during the UPA-II period and now, the minister said the Indian economy, with elevated inflation, was in a fragile condition then.

But it’s on a much stronger footing now and poised to be the world’s third largest soon despite strong external headwinds. So any currency debate now has to be shaped by facts and context, she suggested.

Customs clean-up
The government would further reduce import duties wherever necessary, on top of the cuts already made over the past two years, the finance minister said, listing the customs overhaul as a major focus area for the next set of reforms.

She also highlighted efforts by the government to improve the income tax regime and make it more tax-payer friendly.

“The commentary used to be that income tax rates are not the problem—‘yes, we want lower and lower rates’—but it is the tax administration which causes the problem,” she said.

The government has now adopted a ‘faceless’ I-T system. “Now the same virtues will have to be brought to customs,” she said, calling for transparency. She flagged inflows of contraband goods as “a serious problem”.

‘Rise in Household Assets’
Responding to a question, Sitharaman said households may be taking loans but their assets are also swelling. People are investing in financial products and in physical assets such as houses in large numbers, she said, indicating that domestic savings are being parked in different avenues for higher returns. “So, I don’t think we should narrow it down to the debate of (a fall in) deposits in the public sector banks,” she said.

Freebie & recast of state loans
Sitharaman expressed concern over some fiscally-strained states financing the so-called “freebies” through borrowings, cautioning against such a practice. The minister encouraged states to restructure their debt by repaying their high-cost loans taken in the past. She offered hand-holding and assistance by senior Union finance ministry officials should states seek it. “Some states have actually shown keen interest and benefited from it (loan restructuring),” she said.