Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: list of goods taxed at 4% :: empanelment :: form 3cd :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: due date for vat payment :: cpt :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT Audit :: Central Excise rule to resale the machines to a new company :: TDS :: VAT RATES :: ACCOUNTING STANDARD :: articles on VAT and GST in India :: ARTICLES ON INPUT TAX CREDIT IN VAT
« General »
 Aadhaar is must for income tax returns if you have one; Here's how you can file it online
 Will it be a tax haven above the law?
 Your mutual fund investment tax efficient? Here are 3 steps to ensure utmost efficiency for your portfolio
 Finally a goods and services tax. But what lies ahead?
 Tax May Rise On Outbound M&As, Indian Mncs’ Investments
 Filing income tax return? Do remember to claim benefits on your reimbursements
 Banks will have a hard slog ahead to get GST-ready
 Clarification regarding applicability of Section 16 (1)(a) of the Companies Act. 2013 with reference to cases under corresponding provisions of Companies Act. 1956
 Introduce indemnity clauses with suppliers on tax compliance: Expert
 While filing tax in India, NRIs do not have to report overseas assets
  Clarification regarding applicability of Section 16 (1)(a) of the Companies Act. 2013 with reference to cases under corresponding provisions of Companies Act. 1956 -reg.

Road map on fiscal deficit pushed to budget session
December, 30th 2011

Government forecasts of the fiscal deficit and economic growth have gone awry, but the finance ministry is yet to publish the fiscal road map for the next five years through amendments to the Fiscal Responsibility and Budget Management (FRBM) Act, as promised in this years budget announcement.

With rising government spending and a drop in revenue threatening to push the fiscal deficit beyond 5.5% of gross domestic product (GDP), higher than the projected 4.6%, a fiscal consolidation road map is crucial for effective policy making by the government and the Reserve Bank of India (RBI).

The government had been planning to introduce the road map in Parliaments winter session, which ended on Thursday. It may now probably be tabled only in the budget session, said two finance ministry officials, who declined to be named.
Finance minister Pranab Mukherjee had promised the introduction of the road map in this years budget speech.

In the course of the year, the central government would introduce an amendment to the FRBM Act, laying down the fiscal road map for the next five years, he had said.

The amendments to the FRBM Act will be on the lines of the recommendations of the 13th Finance Commission, which suggested that shocks that could impact fiscal targets set under the legislation be specified beforehand. The report had argued that global recession, an agrarian crisis on account of drought or floods, asset price bubbles or systemic crises in the financial markets may require the government to expand its spending, forcing it to overstep fiscal deficit targets.

We are working on the amendment. It will not come in the winter session. Hopefully, it will be tabled in the budget session, said one of the finance ministry officials cited above.

Watch video

In 2010-11, the government managed to better its fiscal deficit target after reaping a windfall Rs1.06 trillion from the auction of third-generation telecom spectrum and broadband wireless access. It is on the verge of overshooting the target this fiscal. In the first seven months of the financial year, Indias fiscal deficit was almost 75% of the budgeted estimate, significantly higher than 42.6% in the corresponding period last year.

A shortfall in direct and indirect tax collections on account of slowing economic growth and a rising subsidy bill, along with the uncertainty over the government meeting its disinvestment target of Rs40,000 crore, has forced the government to borrow more from the market. Analysts expect the governments borrowing programme to reach Rs5 trillion in the current fiscal.

FRBM is an indicator or a statement of intent of the government towards fiscal consolidation. The road map will enhance the credibility of the fiscal policy, said D.K Joshi, chief economist at rating agency Crisil Ltd. With the government lining up additional expenditure in the coming years through the food security Bill, it is important to lay down an action plan on how the government will create fiscal space needed for this extra spending.

This can be dome either through restructuring expenditure or expanding the revenue base through tax reforms like the goods and services tax (GST), he said.

In its mid-quarter policy review, RBI had warned that the slow pace of fiscal consolidation will keep medium-term inflation risks in the economy high.

For the central bank, a clear fiscal road map helps in better policy formation, said Joshi. It is always good that there is coordination between fiscal and monetary policy and they are not at cross purposes with each other.

The government, which had budgeted a subsidy bill of Rs1.34 trillion for oil, fertilizer and food, is estimated to overshoot the projections by Rs70,000-80,000 crore in the current fiscal. On the other hand, its tax collections are likely to fall short by at least Rs30,000 crore.

Though the government is targeting Rs5.85 trillion from direct taxes in the current fiscal, the net direct tax collection was only Rs2.35 trillion during the first eight months of this fiscal. The indirect tax scenario is only slightly better. Of the Rs4 trillion target, the government collected Rs2.5 trillion in indirect taxes in the April-November period.

The 13th Finance Commission report had projected Indias fiscal deficit at 4.8% in 2011-12, 4.2% in 2012-13 and 3% in the next two fiscal years. But the fiscal deficit targets are unlikely to hold given the changing economic scenario.

Certain recommendations of the 13th Finance Commission may not hold true in the current scenario. For example, the growth figures on which they made their projections. When growth figures change, they impact the fiscal deficit also, Joshi said.

At the time the report was submitted, Indias economy was expected to grow at around 9%. This number has now been scaled down to 7.5%.

There is need for the government to bring about more structural changes in the fiscal road map, says Indranil Pan, chief economist at Kotak Mahindra Bank Ltd.

There needs to be a clear strategy on issues such as the implementation of the direct tax code and the GST. The government needs to look for ways to widen the service tax net, to ensure that this segment is taxed commensurate with its contribution to GDP, said Pan. On the expenditure side, the government needs to take steps to check slippages in its flagship programmes. Another issue is oil subsidy. After deregulating petrol prices, the government has developed cold feet for freeing up diesel prices.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Content Management System developers CMS developers Content Management Solutions CMS Solutions CMS India Content Management System India CMS development India Website CMS Website Content Management India Portal CMS India CMS Outsourcing CMS Vendor Complete CMS Custom CMS Services

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions