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Fiscal discipline must to bring back growth: FM
Tribune News Service

New Delhi, June 1
Finance Minister Arun Jaitley today cautioned the country to prepare for “fiscal discipline” in order to restore the health of the economy and bring it back on the path of higher growth.

Aware of the immediate challenge he faces, the Finance Minister said the Narendra Modi government inherited an economy whose GDP figures grew by sub-5 per cent for two successive years, that had negative growth in mining and quarrying sectors, poor performance in manufacturing, a disturbed investment cycle and negative sentiment that affected trade, hotel and transportation sectors, which are going to witness slower growth than last year.

In his blog, “From Celebration to Challenges”, he noted that CSO estimates, released in May, show the inflation continuing to rise with April figure at 8.9 per cent. The slowdown in economic growth coupled with high inflationary pressure poses a challenge to the macro-economic environment. Tax collections are at 10.1 per cent of the GDP compared to the initial budget estimates of 10.9 per cent.

“India can ill-afford this trend. This has serious social consequences since slowdown comes with a decade of jobless growth. Reviving the growth momentum, containing inflation and altering the pattern of growth to gainful employment is today an overriding priority. There is a need to boost domestic low-cost manufacturing and hasten the pace of reforms. Price stability and growth are intertwined but may require a different strategy,” the Finance Minister said.

Jaitley interpreted the recent verdict as two different electoral attitudes of the voters — a high level of dissatisfaction with the UPA government and hope in the Modi-led BJP/NDA which commands the government to pull the country out of the present economic situation.

The Finance Minister said fiscal rectitude would be a combination of monetary and fiscal policy. Slower GDP growth will imply lower tax buoyancy and higher fiscal deficit. The country must move towards an era of fiscal discipline where it can reduce the fiscal deficit, contain inflation and improve upon its growth rates. India must prepare itself for this.

“We must commit ourselves to this discipline in order to strengthen the Indian economy, which can improve the quality of life of every Indian and pull out the deprived ones from the state of poverty. Short-term disciplining till we reverse the present trend will give us long term benefits.”





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