Mindful of the chaos which the demonetisation exercise has unleashed on the cash circulation system of the country, the government is mainly concerned about massive fall in jobs, especially in small scale industries like textiles, leather, jewellery and other allied sectors.
With the crucial Uttar Pradesh Assembly elections just weeks away, the almost closing down of leather, carpet, brass and bangles industries — products of which the state is the chief producer — seems to be on the government’s radar and, hence, Prime Minister Narendra Modi on Tuesday held high-level deliberations with economists at Niti Aayog in the presence of finance minister Arun Jaitley and the think tank’s top brass to thrash out a fiscal roadmap for the future.
Also with revenue collection falling in the wake of cash crunch, as sales have been hit across various sectors, it seems unlikely that the government is going to tinker with the tax structure in the forthcoming Union Budget. Due to lack of buyers for their produce, farmers also have reduced their cultivation areas drastically.
It is in the wake of this existing economic scenario that Mr Modi mainly discussed issues like agriculture, budget, job creation and taxation during the meeting.
Sources privy to the development told this newspaper that the meeting mainly focused on how to sustain jobs in the current scenario and to ensure that no major rejig is done with the current tax structure.
Taxation was one of the main areas of discussion. On tax reforms, experts suggested taxation simplification in the areas of corporate and personal income tax.
Also strategic disinvestment and listing of public sector undertakings was recommended as well as increased use of direct benefit transfer was suggested to rationalise subsidy expenditure.
Meanwhile official sources said that while speaking about the Budget cycle, Mr Modi told the economists that this has an effect on the real economy. He said that in the country’s existing Budget calendar, the authorisation of expenditure comes with the onset of the monsoon.
This he said, results in government programmes being relatively inactive in the productive pre-monsoon months. He said that keeping this in view, the date of budget presentation is being advanced, so that expenditure is authorised by the time the new financial year begins, an official statement issued after the meeting said.
Meanwhile, experts in their presentation on agriculture to the Prime Minister said that to meet the stated goal of doubling farmers income by 2022, farmers should be given freedom to market their produce. They should be allowed to sell to private wholesale markets.
High value agriculture, more market support and price support schemes should be in place and micro irrigation should be promoted.
On jobs and skill development, economists suggested that there is a need to bring firms into the formal, organised sector since that will lead to growth in well-paying, productive jobs.
The meeting was attended by economists and experts including Prof. Pravin Krishna, Prof Sukhpal Singh, Prof Vijay Paul Sharma, former Finance Secretary Sumit Bose and journalist T N Ninan among others.