Concerned over the rising subsidy bill, Finance Minister Arun Jailtley has stated that ballooning subsidy bill needs to be lowered by rationalising the populist measures. Finance Minister added that government should not be doling out pre-poll populist measures that increase the subsidy bill and destroy economic growth.
After touching a low of under 2.5 percent of GDP in FY07, the government borrowings have been on a continuous upward spiral which pushed up the subsidy bill to over 2 percent of the GDP as of FY14. The rising subsidy bill has pushed the fiscal deficit to 4.5 percent last fiscal and this year the government has pegged it at 4.1 percent of the GDP or Rs 5.31 lakh crore.
On tax front, Finance Minister asserted that the government is not in favor of high tax regime, but at this juncture high government revenue is required to promote the business in the country. Currently, country needs investment for better economic growth which in turn will lead to job creation and higher revenue for the government.
Government’s revenue collection has been remained under pressure due to the prevailing economic slowdown. Tax collection is the major source of revenue for the government. In the previous fiscal year, tax collection fell short of target by a whopping Rs 77,000 crore as the government collected Rs 11.58 lakh crore against the budget estimate of Rs 12.35 lakh crore. The government estimated to garner Rs 13.64 lakh crore from both direct and indirect tax collection during the current fiscal.