Narendra Modi says early budget will expedite release of funds

New Delhi: Prime Minister Narendra Modi on Tuesday told economists at the NITI Aayog that advancing the date of presentation of the Union budget by a month to 1 February will help speed up investment expenditure in the productive pre-monsoon months.

Speaking at a session titled ‘Economic Policy – The Road Ahead’, Modi said the budget cycle had an effect on the real economy.

“In our existing budget calendar, the authorization of expenditure comes with the onset of the monsoon. This results in government programmes being relatively inactive in the productive pre-monsoon months. Keeping this in view, the date of budget presentation is being advanced, so that expenditure is authorized by the time the new financial year begins,” he explained.

Briefing reporters on the proceedings of the session, Arvind Panagariya, deputy chairman, NITI Aayog said the prime minister emphasised that India ought to have centres of excellence based on the climate of a particular region.

Like the plan to have 10 public and 10 private world class universities, announced in the 2016 Union budget, Modi said India needed to have world class agricultural universities as well.

“The prime minister also picked up on the silo problem between the direct and indirect tax administrations in the finance ministry and emphasised on improving coordination,” Panagariya said.

On the issue of tax evasion, Modi said taxpayers do want to pay taxes but want the proceeds to be used for activities such as building hospitals. “When revenues are not properly spent, he wants to evade the taxes,” Modi said.

Panagariya said the only mention of demonetization came in the context of formalization of the economy. “Some speakers said that since more transactions are now happening through formal, digital platforms, we need to bring more jobs to the formal economy and complementary policies were proposed.”

The NITI Aayog had invited 13 experts and key secretaries for the discussion. On the suggestion of prime minister, the participants were divided into three groups: agriculture; jobs, skills and education; and budget-related issues.

On budget-related issues, experts suggested several priority areas for expenditure such as digital connectivity and rural housing.

“Simplification of direct taxes such as reducing exemptions, bringing down tax rates and increasing the use of direct benefit transfers to reduce subsidy expenditure figured at the meet,” said Panagariya.

Some experts also emphasised better systems for data analytics to facilitate data-driven tax administration.

On agriculture, experts focussed on measures to meet the stated goal of doubling farmers’ income by 2022. Experts focused on agricultural market reforms including APMC (agricultural produce market committee) reforms, allowing farmers to sell to wholesale private markets, micro-irrigation and digital payments to farmers.

On jobs, skills and education, experts emphasised bringing firms into formal, organized sectors since that would lead to growth of well-paying, productive jobs.

The meeting was attended by finance minister Arun Jaitley, minister of state for planning Rao Inderjit Singh, and economists and experts Pravin Krishna, Sukhpal Singh, Vijay Paul Sharma, Neelkanth Mishra, Surjit Bhalla, Pulak Ghosh, Govinda Rao, Madhav Chavan, N.K. Singh, Vivek Dehejia, Pramath Sinha, Sumit Bose and T.N. Ninan.