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Government committed to pursuing subsidy reforms: FM

13 Aug 2015 Evaluate

Finance Minister Arun Jaitey, while tabling the Medium-Term Expenditure Framework Statement in the parliament, reiterated that the government is committed to pursuing subsidy reforms by efficient targeting of subsidies to the poor and needy while saving the ‘scarce financial resources’ for infrastructure and development needs.

Jaitey said that the macro-economic scenario has improved significantly on back of higher growth and subdued inflation, and exuded confidence that interest rates will decline in coming years. He added that Macro-economic outcomes have improved significantly, primarily with the revival of economic growth and subsidence of inflationary tendencies. He said “With fiscal deficit coming down, and easing of inflationary pressure, it's expected that interest rates would be falling in years to come.” Finance minister however cautioned that the Seventh Pay Commission award “poses a risk”.

As per the expenditure framework, the outlay on salary is estimated to go up to Rs 1.16 lakh crore in 2016-17 and Rs 1.28 lakh crore in 2017-18 from Rs 1 lakh crore this fiscal. In case of pension, the expenditure is estimated to rise to Rs 1.02 lakh crore in 2016-17 and Rs 1.12 lakh crore in 2017-18 from Rs 88,521 crore this fiscal. It was also reported that gross domestic saving declined from 33.9 percent in 2011-12 to 30.6 percent in 2013-14, while gross fixed capital formation came down from 31.4 percent in 2011-12 to 28.7 percent in 2014-15.

Jaitley further said that the government is committed to bringing down the fiscal deficit to 3.5 percent in 2016-17, and 3 percent in 2017-18. For the current fiscal, it has been pegged at 3.9 percent of GDP. He said 'Fiscal consolidation strategy of the government hinges on reclaiming high growth in gross tax revenues achieved in the past. This is also essential for creating space for financing programmes of the government.”

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