Chennai:
Planning Commission Deputy Chairman Montek Singh Ahluwalia on Thursday said that efforts were on to reduce subsidies by one per cent in the XIIth plan.
Delivering the first Dr Rajah Chelliah Memorial Lecture, Ahluwalia said that curtailment of subsidies was important to reduce the fiscal deficit as such needed political environment and wisdom to reduce it.
The subsidies constitute 2.6 per cent of the GDP and the target is to bring it down to 1.6 per cent.
Ahluwalia also said that the earnings of the government need to be raised by about four to five per cent. He said in the next five to six years the objective is to bring the gross debt to GDP ratio down. “It means fiscal deficit also must go down to continue the expenditures and investments. And this could be done by increasing revenues as the ratio of GDP and reducing subsidies,” he said.
Ahluwalia said that at present the government’s revenue is 19.4 per cent of GDP while the expenditure was 27.3 per cent and gross debt was 66.7 per cent and fiscal balance was -8 per cent.
He said introducing GST is a great important and it is the single most important tax reform and it will be the best signal to global that India is open for business and we are serious about it.
Ahluwalia also said that in globalization human capital and quality of human capital is essential ingredient to growth. He said that India’s quality of human capital is not consistent to keep the growth at 8 per cent.
The planning commission deputy chairman said that the recently approved Free Trade Agreement with Association of Southeast Asian Nations for trade and services is a major step towards integrating the economy with East Asian nations. In the next five to seven duties on imports from ASEAN will drop to zero, he said.
Ahluwalia also predicted that the Inflation will soften during next year
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