Budget in tune with larger issues: Mayaram

Since industrial production is showing signs of buoyancy, the economy is likely to grow by 5.7-5.8 per cent this fiscal, said Union Finance Secretary Arvind Mayaram on Monday.

However, achieving the 4.1 per cent fiscal deficit target will be a "daunting task", he said."Two things we must remember. One, markets are always sceptical about deficit figures; however, I think the Finance Minister has made it clear, even though it is a daunting task, it will be endeavour of the government to achieve the target. I don't think there should be any doubts on that," Mayaram said, while speaking at the IX Annual International Conference on Public Policy and Management organised by the Indian Institute of Management, Bangalore.

He went on to add, "Secondly, the economy is already looking up. If you look at the recent numbers, whether IIP numbers or PMI numbers, you will see there is uptake in the economy.

So, with that buoyancy in growth which we now anticipate, — and generally, everybody believes it is going to be achieved —, it is going to be close to 5.7 or 5.8 per cent, if not more. Then, I do not see why we should not have such buoyancy on this.”

Tax stability

Despite the criticism it has received, Mayaram said that last month’s Union Budget is in tune with larger issues like tax stability and the government's commitment to the poor, which would be translated into reality in the near future. 

"The budget has been criticised for not being bold enough but the reality is that there is a method to this apparent madness. A major aim was to renew the government's commitment to the poor; we also hope to give infrastructure and its development a push in the right direction. The budget and all public policies are made with the country as a whole in mind, in a way that would not only propose solutions but also provide insight to the outcome of the policy," he said.

Mayaram added that the government also looked to increase the savings and investment rates of people by providing incentives and promising stability in taxation.Responding to a question on the P J Nayak Committee report on corporate governance in public sector banks, Mayaram said, “I think the budget announcement by the Finance Minister is very clear on this; one, the banks will be recapitalised... the NPAs (non-performing assets) will be taken care of, in the sense, there will be systemic improvement in ensuring that the percentage of NPAs goes down, and governance will also be improved.”

 On the topic of smart cities he said, "The McKinsey report states that our cities will become uninhabitable over time with massive strain on resources, which we are already seeing. This underlines the need for smart cities to facilitate absorption of the rural population who are migrating to urban areas.”

Managing debt

Speaking at the same event, RBI Deputy Governor Harun R Khan said the main objective of debt management is to ensure that the government's financing needs and its payment obligations are met at low cost over the medium to long run, with a prudent degree of risk.

Khan said, "As of now, debt ratios are reasonable as the trend over the past decade in declining. In the new millennium, debt-to-GDP ratio is decreasing and stands at 66 per cent of GDP for total government debt and 40 per cent for the central government alone.

On the role of the RBI in public debt management, he said, "The Reserve Bank draws the necessary statutory powers for debt management from Section 21 of the RBI Act, 1934, and although it is an obligation for us, we undertake the management of public debts of various state governments by agreement."