Spending To Make Up For Tax Cut This Year Itself, Says Nirmala Sitharaman

(MENAFN- Live Mint) New Delhi: Higher purchases of goods and services after the GST rate cuts take effect on 22 September will likely make up for the impact of lower tax rate on revenue receipts this year itself, a set of measures to support exporters are in the offing, and further flexibility in allowing entry of professionals from China is expected, finance minister Nirmala Sitharaman said in an interview.

The minister stressed that on account of the expected boost arising from the consumption stimulus, the Centre will maintain its budgeted fiscal deficit target of 4.4% this financial year.

Sitharaman said that her next big test would be ensuring that businesses pass on the benefit of the steep GST rate cuts to the common man.

“Whether actually this is reaching the people is a different exam. I have to take that also,” the minister said. The first test was the rigorous analysis and preparations that went into the tax reform.

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The minister said that making sure the benefit of rate cut is transmitted to the people is her focus.“That will be my area of attention. From 22 September, I will keep a watch.”

With festive purchases getting a boost on account of the tax cuts, including people's aspirational products, this financial year itself, the government will be able to make up for the impact rate cut can have on revenue collection, the minister said.

“In all likelihood, from 22 September, people will go out there to buy. Absolutely, there's likely to be a surge, like the post-covid 'revenge buy.'

India has already shown some flexibility with respect to entry of technicians and experts from China, and more of such relaxations may be underway so that India's infrastructure projects do not suffer, the minister said.

“Already, some flexibility is being shown in the use of Press Note 3, particularly for projects which are already underway and needed technicians and experts to come and complete the project. Similar things will be taken up so that India's infrastructure investments are not struggling for the absence of necessary expertise,” the minister said.

Also Read | India explores easier rules to bolster Chinese investments

Mint reported on Friday that India is exploring whether a company with a small shareholding from a China-based or connected entity should be considered a 'Chinese' firm.

Different departments are working together to prepare a set of steps to support exporters exposed to the US tariffs but India's economic fundamentals remain strong and until the impact of tariffs on different sectors, which may vary depending on their exposure and how they respond, is known, no shift in economic strategy can be spoken about, the minister said.

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