New Delhi: Setting at rest speculation about the possibility of tax cuts to boost growth, Planning Commission deputy chairman Montek Singh Ahluwalia on Tuesday said the government will not change the tax structure during the current fiscal, ending 31March.
“Taxes will not be altered between now and the next budget,” he told reporters on the sidelines of a partnership summit being organised by the Confederation of Indian Industry in the capital.
The next regular budget is likely to be presented sometime in July, while the government will come out with an interim budget and a vote-on-account in February to complete the essential business in view of the forthcoming Lok Sabha elections.
The government, Ahluwalia said, would have to actively use both monetary and fiscal policies in the coming fiscal to boost growth, which is expected to come down to around 7% from 9% in the previous fiscal.
“If we utilise whatever we have announced in the budget, there will be a lot of expenditure,” he added.
The government, as part of the stimulus packages to neutralise the impact of the global financial meltdown on the Indian economy, had reduced excise duty by 4 percentage points and raised public investment, especially on infrastructure sector projects.
Public expenditure, as per the two supplementary demands for grants approved by Parliament earlier, will go up by 20% during the fiscal, over and above the Rs7,50,000 crore given in the budget.
The Reserve Bank too reduced key policy rates and ratios releasing Rs3,20,000 crore into the system and signalling a soft interest rate regime.
Ahluwalia further said that the world economy was expected to decline further during 2009.
Both the International Monetary Fund and the World Bank too have projected further slowdown in global GDP during the year, a forecast that will have adverse implications for the country’s exports, which declined by 12% and 10% during October and November, respectively.
Answering questions on inflation, Ahluwalia said price rise has ceased to be an area of concern.
Having touched a peak of 12.91% in August, inflation has come to less than 6% in January and according to finance ministry projections the rate of price rise may further decline to 3-4% by end March.
On streamlining the regulatory structure, Ahluwalia opined that regulators in different sectors need a common framework.
“Each ministry has introduced its own regulatory structure, of which the principles are not common. We need common structures,” he said.
Streamlining the regulatory framework is important to promote infrastructure investment, which the government has been trying to encourage as part of the strategy to battle economic slowdown.