Need to formalise ‘large underbelly’ of economy: FM

India needs to formalise ‘a large underbelly’ of businesses operating outside the system to widen the tax base and make its finances more resilient, Finance and Corporate Affairs Minister Nirmala Sitharaman on Thursday.

Stating that she was not concerned about India’s debt burden at this point, the Minister said a turnaround in the economy driven by public infrastructure investments will be able to bolster revenue collections.

“In India, we have to be a lot smarter in the way in which (tax) evasion can be contained. Tax avoidance will also have to be carefully studied and action needs to be taken on that without obviously making it difficult for honest taxpayers,” she said, adding that technology would be a critical tool to plug loopholes as was being done under the Goods and Services Tax (GST) regime.

“There is still a large underbelly which is yet to be formalised into the mainstream of the economy. We have to get them on board and make compliance, tax assessments all easy, otherwise small businesses will never be encouraged to join the system,” the Minister said in an interaction at the India Global Forum.

Ms Sitharaman exuded confidence about completing the privatisation of public sector firms such as Air India and BPCL this year, indicating that earlier attempts were marred by poor timing.

“Privatisation is something which we had announced in the last tenure of our government. There have been one or two instances where we nearly reached a point of doing it. In 2019, when the government came back for its second tenure, we announced it in the Budget, but there was a slowdown in the economy that year, so naturally wasn’t the time that the market could pick up on those offers,” she said.

“Last year, of course, there was COVID-19 and this year, when the economy has opened up and with the vaccinations happening, I expect to go ahead with the programme without any hesitation. We are on course,” she said. The government has set a target of ₹1.75 lakh crore from disinvestment receipts for FY22.

Citing the eight consecutive months of GST collections of more than ₹1 lakh crore each, Ms Sitharaman said she hoped it would be sustained as there was no national lockdown this year and economic activity was picking up pace.

“I think revenue generation will give us a bit more leeway to keep some resources for taking up any challenge that arises,” the Minister said, responding to a query about the country’s preparedness for a possible third wave of COVID-19.

“Two days ago, we announced different measures to improve the medical infrastructure in tier-2 and -3 cities, and not just the metropolitan cities. So the ramping up of medical infrastructure looking at different segments of the population like children, is happening at a good speed, and God forbid, if there’s a third wave, we should have medical infrastructure in place by then,” she said.

Stating that India’s vaccination drive was now covering about 45-50 lakh people every day, she said: “The way in which we are moving towards greater coverage in vaccination, we hope to be able to keep most of the vulnerable population safe from the attack of the virus.”

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Printable version | Sep 16, 2021 5:30:35 PM |

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