new Delhi: India will present its annual budget on 26 February and was aiming at enacting legislation in the second half of this year for introducing a new Goods and Services Tax (GST), the finance minister said on Saturday.
Pranab Mukherjee also said he is hopeful growth rate of Asia’s third largest economy could touch 8 percent in the fiscal year to March 2010, faster than 6.7% in the previous year.
A raft of stimulus through tax cuts and higher spending by the government, coupled with central bank’s aggressive rate cuts and infusion of liquidity in financial markets helped the economy weather the global slump faster than most nations.
With faster growth in output in recent months and rise in inflation, India is widely expected to withdraw some of its fiscal stimulus in the forthcoming budget.
“Budget will be presented on 26 February,” Mukherjee told reporters at a luncheon meeting but gave no details.
Industry bodies have urged the government to extend fiscal stimulus by six months this year, but a 16-year high fiscal deficit of 6.8% of gross domestic product estimated for 2009/10, has left little room for extending tax concessions.
Mukherjee said it would take 7-8 months for the government to bring in legislations for introducing GST, which was earlier scheduled on April 2010.
The federal and state government are now still debating the rates of proposed GST, which would replace a multitude of levies such as excise duty, service tax, value-added tax, and ease the burden of industry.
The government expects the proposed tax reform along with higher growth in the economy leading to more revenues and stake sales in state-run firms, could help lower the fiscal deficit in 2010/11 to an estimated at 5.5%.
Sunil Mitra, a secretary in the finance ministry looking at disinvestment of state-run firms, said some of the big-ticket share sales including that of Steel Authority of India Ltd and Coal India Ltd would come in the next fiscal year.
An initial public offering of telecoms firm BSNL was also likely in 2010/11, he said.
The Congress Party-led coalition government, which was re-elected for a second 5-year term in July, accelerated the stake sale process and sold shares in NHPC and Oil India that fetched $1.8 billion.
India aims to sell shares of about 60 state-run firms in the coming years, with offers for power utility NTPC, miner NMDC, Rural Electrification Corp and Satluj Jal Vidyut expected by end-March 2010, Mitra said.