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Focus of government's second year would be on increasing spending on social sector schemes: Jaitley

Finance Minister Arun Jaitley on Thursday said the economy was in a recovery mode with inflation and fiscal deficit under control and despondency giving way to a positive environment.

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Finance Minister Arun Jaitley on Thursday said the economy was in a recovery mode with inflation and fiscal deficit under control and despondency giving way to a positive environment.

Jaitley, who got a slew of reform measures approved in the just-concluded Budget session of Parliament, said the focus of the Narendra Modi-led government in the second year would be increasing spending on rural infrastructure, including irrigation and social sector schemes. "Economy is in a recovery stage, inflation is under control, growth appears to be much better... fiscal deficit, Current Account Deficit (CAD) appears to be under control," he told reporters here.

Asked if he expects the Reserve Bank to cut interest rate in view of sliding inflation which is in negative territory for past six months to boost growth, Jaitley said, "I expect what every Indian expects." Listing positives of the economy, he said services sector is expanding, infrastructure spending has increased and most of the laws that aim to improve the management of the economy have sailed through in Parliament.

"Only last one or two (reform legislations) are left and there the direction seems positive. I think from despondency we have entered the more positive zone," the Minister said. Among the reform measures, the government was able to get the legislations regarding insurance, coal and other minerals, black money bill, Companies laws amendment bill and Negotiable Instruments amendment bill approved in Parliament.

Jaitley said that good progress has been made on the Goods and Services Tax (GST) bill which the government was hopeful of getting passed in the Monsoon session in July.
On land acquisition bill, he said, referring it to 30-member Joint Committee was the fastest route of getting an approval as it ran into opposition from the Congress and other parties. 

Outlining the future course of action, Jaitley said the effort would be to implement the announcements made in the budget. "Some of which may need a legislation, some need only executive action and the direction will be the same as indicated in Budget," he said. Besides, he added the government would also focus on spending in rural infrastructure, irrigation and social sector schemes.

"The important challenges would be to roll out our expenditure in infrastructure which we expanded and that will be very critical for growth in manufacturing... We are all anxiously waiting for June 2 (for RBI policy)", he added.
On the impact of projected below-normal monsoon on the farm sector, Jaitley said that he would not like to hazard a guess but stressed that the government would continue to focus on increasing spending or rural infrastructure and irrigation schemes.

The quantum of expenditure, he added, would go up with increase in growth and better realisation of revenue. "There are a lot of rain-fed areas... our future expenditures as the growth goes to 8 per cent and revenues keep increasing this year and next year, (will be on) rural infrastructure and irrigation. These are two areas of huge future investment," the minister said.

The other effort would be to attract more foreign direct investment to boost development and growth, Jaitley said. Replying questions on the Income Tax Return (ITR) forms, the Minister said that the Central Board of Direct Taxes (CBDT) was working over it and a simplified form would be issued shortly. "We will try to simplify it to the largest extent possible," Jaitley said.

Following the controversy over the new ITR forms which sought details of bank accounts and foreign visits, the revenue department had announced putting them on hold. The salaried individuals and those persons who do not have business/professional income are required to file income tax returns in either ITR-1 or ITR-2 by July 31.

The tax department also held consultations with industry chambers seeking their views for simplification of the ITR forms. Answering questions on the controversy with regard to the setting up of a Public Debt Management Agency (PDMA) outside the Reserve Bank, Finance Secretary Rajiv Mehrishi said that there was a conflict of interest in PDMA and monetary policy committee.

"...there's conflict of interest. Basically the PDMA and the monetary policy committee are two sides of the same coin so the two will have to be done together otherwise the conflict of interest becomes more persistent," he added. On when these two bodies will be set up, the Finance Secretary said, "exact timing will be determined but it has to go hand in hand. It has to be 2-3 months here and there.

"Except the sectors which are sensitive to national economy or national interest, in today's context I have always regarded it as additionality of resource. And therefore I am quite sure that the DIPP, the nodal department, would look at it with a positive view", he added.

When asked as to when the A P Shah committee on tax issues would be set up, Jaitley said: "the terms of reference would come in the next couple of days". Jaitley had last week announced setting up of the panel to look into the dues of MAT on FIIs, besides other legacy tax issues. 

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