Inflation under control and economy in revival mode, says FM Arun Jaitley

Enthused by increase in indirect tax collections, Finance Minster Arun Jaitley on Monday said that the economy is in a revival phase and hinted that it will clock a growth rate in excess of 8% in 2015-16.

"Our fiscal deficit figures are under control. Inflation is very much under control. We stand by the growth projections which we made at the beginning of the year and indirect taxation data actually supplements the idea of those projections," he said while addressing a conference of Chief Commissioners and Director Generals of Customs, Central Excise and Service Tax.

The Economic Survey presented by Jaitley in February had projected a growth rate of 8.1 to 8.5% for the current financial year.

Observing that the indirect tax collections improved by 14.6% in April-July after discounting for the fresh revenue initiatives, the Minister said that the Indian economy is in a revival phase though challenges exist as far as global developments are concerned.

The total indirect tax collections during the first four months of the fiscal rose by 37%.

On the global front, Jaitley said developments like the possibility of US Federal Reserve cutting rates, crisis in Europe and devaluation of the Chinese currency will have implications on India.

The Minister also attributed today's stock market crash to external factors, stressing that "there is not a single domestic factor in India which has either contributed to it or added to it."

The stock markets witnessed a blood-bath with BSE Sensex plunging by over 1,700 points and the NSE Nifty slipping over 500 points in pre-close trade.

The government and the RBI are closely watching the situation, Jaitley said, adding "our response at this stage is very clear. We have to strengthen our own economy. We have embarked upon a path for one year and and a quarter that even in the midst of global slowdown India should emerge as one of the fastest growing economy in the world." 

Observing that indirect tax revenues in April-July rose by 37% and 14.6% after discounting for additional tax mop up measures, Jaitley said it is reflective of pick up in the manufacturing sector.

"It is the most realistic estimate we have... it's a reality. And probably this is one of the better news (as regards) economic indicators because it factors in how the manufacturing sector is likely to do and how the services sector itself is likely to do," he said.

The Indian economy is in a revival stage, Jaitley said, adding that concerns over the global developments remain.

"Today, we are faced with multiple challenges... as trends come up almost by the day... you can have an economy in Europe which is facing crisis."

"You can, in another way, have speculative fear created by how the US Fed would act and the last fortnight you had the devaluation trend and the economic data from China which is creating ripples in the global market.

"And obviously being part of the globally integrated economy, this would (have) at least some transient impact as far as we are concerned," he said.

Amid these developments, Jaitley said it is important for the country to move ahead on the pre-determined roadmap for further strengthening the economy and enhance its capacity to meet global challenges.

Referring to the progress of monsoon, the Minister said it has been "fairly reasonable" and would boost growth prospects by enhancing demand and increasing economic activity during the course of the fiscal.

Jaitley, who also launched the revamped website of the Central Board of Excise and Customs (CBEC), called upon the officers to improve collections and viewed it as a challenging task.

"You have a very difficult task because tax collection is very challenging... its challenging because there are many segments in the society who are uncomfortable (in) paying taxes.

"And therefore, this is even exaggerated complaints are normally heard very loudly," he said, while appreciating the efforts of the CBEC to improve interaction with the taxpayers.