In an article titled The Economy and the Markets Reward Structural Reforms and Fiscal Prudence, Union Minister Arun Jaitley makes it clear that the Modi government’s policies have established India as the fastest growing global economy, with the high GDP growth rate of 7.7 percent likely to continue for a few years. His article hits out at some earlier Finance Ministers who had predicted a 2 percent decline in GDP growth after demonetisation, saying they had been proved wrong.
Arun Jaitley substantiates his assessment under three main points.
He contends that all structural reforms, social sector schemes and rural development programmes over the last four years, have resulted in high government spending which has promoted growth.
Where are the Jobs?
He points out that data analysis clearly shows construction sector expanding by double digits, creating massive numbers of jobs. Both FDI and Domestic investment are increasing, and the Insolvency and Bankruptcy Code is unlocking value in Non-Performing Assets. Fixed capital formation and Manufacturing are growig, and expenditure on rural projects along with financial inclusion have promoted self-employment.
The Revenue Situation
He also said country has become more tax compliant due to Demonetisation, GST, digitisation, AADHAR and anti-black money measures. Income tax returns have shown a 25 percent growth, corporate returns have increased by 17 percent. Tax-GDP ratio has increased to 11.5 percent, of which 9.8 percent is non-oil taxes to GDP.
But he makes a fervent appeal to citizens to honour their patriotic duty of being more tax compliant. Saying that government has very strong reputation for fiscal prudence, he contends reducing taxes on oil by 25 rupees, would take the country into a debt trap. He concludes that the economy and markets reward structural reforms, fiscal prudence, and macro-economic stability and that the transformation from UPA’s “policy paralysis” to NDA’s “fastest growing economy” conclusively