The Finance Minister Mr. Arun Jaitley has begun his budget speech in Parliament. The FM so far in the Budget speech seems optimistic about the Indian economy. The Government expects GDP growth to accelerate to 7.4%, while growth in FY16 is expected to be in the range of 8% to 8.5%. The FM has stated that GST, the indirect tax system should be put in place by 1st April 2016. Going forward, the Government expects to transfer around 62% of the tax receipts to the states.
Through JAM Trinity, the cash transfers are expected to be leakage proof and much efficient.
The target for inflation has been set at below 6%. While the Government expects to meet fiscal target of 4.1% this year, the target for fiscal deficit has been set at 3.9%, 3.5% and 3% for the year FY 15-16, FY 16-17 and FY 17-18 respectively. The benefits from fiscal consolidation will be directed for better infrastructure creation. To achieve these targets, the Finance Minister has stated a requirement of Rs 1.25 lac crores for public investment. However, the road to fiscal consolidation won't be easy with challenges like low agricultural income, lack of infrastructure and falling share of the manufacturing sector in the GDP.