Jaitley hints at measures to boost growth, rules out cut in fuel prices

Tribune News Service

New Delhi, September 20

Finance Minister Arun Jaitley today hinted at a package of measures to boost the economy, while virtually ruling out any cut in duties on petroleum products to check the spike in fuel prices.

Speaking after the meeting of the Union Cabinet, Jaitley said an announcement on any additional steps will be made after consulting Prime Minister Narendra Modi.

“We have taken note of all economic indicators which are available. The government will take any additional moves which are necessary. I am not in a position to announce today in the press conference. I will certainly consult the Prime Minister before that and when we decide, you will come to know,” he said.

“This has been a pro-active government on the reforms agenda. Over the past two days, I have had a series of discussions with ministerial colleagues and various secretaries. We have been taking appropriate actions. We have been consistently moving on the reform agenda,” he stressed.

Analysts have said short-term fixes for the economy are unlikely as the cost of a stimulus will outweigh the benefits. Radhika Rao, India Economist, DBS Bank, said the soft growth numbers in the April-June quarter belied expectations for a return to over 7% growth in FY17-18.

Rao said calls to support growth via fiscal or monetary policies and a competitive exchange rate are likely to rise. However, there is limited headroom to step up fiscal spending without undermining the hard-earned progress in fiscal consolidation, she added.

Monetary policy will be constrained by inflation amid preference for a stable rather than weaker currency. “Overall, the costs of targeting higher growth with extra stimulus are likely to outweigh the benefits”, Rao added.

On the current high transport fuel prices, Jaitley said it was a temporary spike in global prices caused by the supply-demand mismatch due to hurricanes that hit the US coast.

Asked about the possibility of a cut in excise duties on petroleum products, he said government needed money for public spending to push growth through infrastructure expansion and for social sector schemes.

Regarding the technical glitches that have plagued the digital filing of GST returns by businesses, Jaitley blamed it on last-minute rush to meet the deadline.