Revenue Secretary Tarun Bajaj
The capital expenditure and public investment thrust laid out by the government in the 2021-22 Union Budget can only take the economy so far, and more initiative from the private sector will be needed to ensure stable sustained growth, Revenue Secretary Tarun Bajaj said on August 11.
Addressing the annual summit of industry body Confederation of Indian Industries, Bajaj said that the resilience shown by India Inc through its corporate results was not translating to more investment on the ground.
“I want to understand from you the one thing which is still missing, that is the animal spirits. Private investment has still not picked up as much. I want to understand what more you want us to do so the private sector can also invest more,” Bajaj said.
“Let me say that the government infrastructure spending or capital expenditure can only help that much, and for that long. For a long term, sustained growth of the economy, we want you people to come forward, to invest, to manufacture, to start services,” he said.
Bajaj said that steps taken by the government like lowering corporate taxes and repealing retrospective tax showed that the official policy is to give a stable and predictable tax regime.
“Corporate India showed its resilience in bouncing back from the lockdown in the April-June quarter of 2020-21. The results that you showed actually showed up in our revenues which were not as bad as we were anticipating them to be,” Bajaj said. “This year also, the encouraging thing is that perhaps the corporate sector is doing better than what we were expecting it to, which is a very good sign for the economy.”
Bajaj said that customs duties had been pared on certain items to encourage industry to improve its competitiveness and take on global giants on equal terms. The government policy has yielded results as the country has emerged as a net exporter of mobile phones. The PLI scheme has gained significant traction and the government expects a lot of investment to come in the identified sectors in future, said Bajaj.
While commenting on the complex GST structure, Bajaj said that the revenue-neutral rate has come down significantly from 15.3 percent to 11.6 per cent. “No doubt, the glitches remain but this is just the beginning and we need stability and predictability in the indirect tax system for the GST rates to come down. We need to look at bringing the exempted items under the GST fold and correct the inverted duty structure,” he said.
Responding to a comment on the fact that India’s tax-GDP ratio has remained constant, the revenue secretary mentioned that the government is focused on widening the tax base for which it is not increasing taxes for existing categories of taxpayers to raise revenue.