No fiscal incompetence [Current Affairs for IAS Exams – 10 February 2018]
Union Finance Minister Arun Jaitley trashed the Opposition’s charge of fiscal mismanagement, stating that the four-year-old NDA government’s journey was that from a state of policy paralysis to structural reforms.
Replying to the Budget debate in the Rajya Sabha, Mr. Jaitley expressed surprise over former Finance Minister P. Chidambaram’s charge that by reducing corporate tax to 25% for companies with turnover up to Rs. 250 crore, he had favoured the corporates.
Mr. Jaitley said it was Mr. Chidambaram, who as then Finance Minister had drafted the Direct Tax Code mooting the idea of 25% corporate tax.
The NDA government is also considering a legislation changing it to the turnover criteria for classification of industries.
For medium scale industries, it would be Rs. 250 crore, he said.
The Finance Minister said the idea behind lower tax was to enable MSMEs to invest more, which would create more jobs.
The same trend was noticed in the United States (with below 20% corporate tax) and other competing economies.
Owing to this, while covering 99% of industries, the revenue forgone would be Rs. 7,000 crore, whereas implementing it across the board would have cost Rs. 40,000-50,000 crore.
Mr. Jaitley said indications from the Agriculture Ministry were that the basis for calculations would be actual paid out cost plus family labour.
Mr. Jaitley also assured the House that the proposed health coverage plan for 10 crore families would in all likelihood be implemented completely this year.
On expenses, the Finance Minister said the basic principle was that the bigger the size of population, the lower the per capita premium.
He said it would be affordable, adding that the NITI Aayog had carried out an assessment.