2014/15 fiscal deficit target "daunting": Arun Jaitley

NEW DELHI: Finance Minister Arun Jaitley has said that achieving this year’s fiscal deficit target of 4.1% of GDP is a “daunting” task and that the subsidy bill will be reduced progressively. “As far as the fiscal deficit is concerned, I have already said that it is a daunting challenge…. I have accepted the figures and I moved on the presumption that the figures given in the Vote-on-Account of the Interim Budget by my predecessor (P Chidambaram) are correct. Therefore, I have maintained those figures in the larger interest of the economy,” he said in the Lok Sabha on Friday. The minister was replying to supplementary questions. Jaitley, who presented his first Budget on July 10, said the government will endeavour for more economic activity, better growth and, therefore, higher tax buoyancy.

To a supplementary on the need to recover pending taxes and removing tax collections instead of slashing subsidies to improve fiscal deficit, Jaitley said fiscal deficit is a situation which is reached when the government's expenditures go out of control and there is no rise in revenue. He said taxation has to be rationalised to make Indian products competitive.

He said better saleability of products would mean increase in growth which would lead to larger revenue.

The finance minister said the present government is clear that increased taxes lead to sluggishness in the economy. Jaitley said the government “shall” rationalise subsidies to ensure that only the vulnerable sections get its benefits and not those who are ineligible.

He said keeping in view the importance of “keeping fiscal deficit” under control, the government proposes to bring down major subsidies from 2.2% of GDP in 2013-14 to 2.03% of GDP in the current fiscal.