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.

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