New Delhi: Government on Saturday said the Budget 2014-15 has brought about clarity in tax policies and it will walk the difficult path to bring growth impulses back into the economy amidst fiscal constraints.
"Both on direct and indirect tax side, the main focus of the government was to revive growth, to revive manufacturing sector, to take steps that will result in creation of jobs, go in for tax rationalisation, reduce tax litigations and ambiguity in policies," Revenue Secretary Shaktikanta Das said.
At the post-budget interaction with industry chamber Ficci, Das said the Budget has sought to bring in greater clarity in taxation policy.
In his maiden Budget presented in Parliament on July 10, Finance Minister Arun Jaitley has tried to provide relief to the middle class by increasing tax exemption limit by Rs 50,000 to Rs 2.50 lakh. It also hiked deduction limit for investments in financial instruments under 80C by Rs 50,000 to Rs 1.50 lakh.
The Budget contains several proposals to boost the manufacturing sector apart from assurance that government will not "ordinarily" bring about any change retrospectively which creates a fresh "liability" or tax demand.
Finance Secretary Arvind Mayaram, who along with other secretaries of the Finance Ministry was interacting with industry leaders, said government was open to discussing ideas with them and addressing their concerns.
"My own perspective is that this is a growth oriented Budget. It will bring the growth impulses back into the economy...We will have to move a very difficult path ahead, but there is a determination that the government would walk that path," Mayaram said.
India's economic growth slumped to sub 5 percent in the past two fiscals leading slowdown in revenue generation and high fiscal deficit.
The government has pledged to bring the fiscal deficit down to 4.1 percent of GDP in the current fiscal from 4.5 per cent in the last year.
Industry had made many demands, Mayaram said, adding that the Budget was not the last one and there would be many occasions to address their issues.
"This is not the only budget government is going to present. This is not the only time that the changes could have been made," he said.
On meeting the fiscal deficit target, Mayaram said: "There are always challenges and we have to go forward keeping in mind there are uncertainties, especially in the global situation. But as of now we are confident that we will be able to manage it at 4.1 percent."
Meanwhile, Department of Financial Services Secretary G S Sandhu said many initiatives have been taken by the government to take economic growth rate to 7-8 percent in the next three years.
Banks and especially public sector banks would play an important role in the growth of economy, he said.
To strengthen public sector banks, the government has decided to allow these banks to raise capital largely from disinvestment to meet Basel III norms.
Sandhu said: "Which banks will go first, that we have to work out. We have asked all banks to submit their capital requirement plans. The schedule will be worked out soon."
The decision would be based on various consideration including value of shares and possibility of going up further, he said.
Jaitley said in the Budget speech said that to be "in line with Basel-III norms there is a requirement to infuse Rs 2,40,000 crore as equity by 2018 in our banks. To meet this huge capital requirement we need to raise additional resources to fulfil this obligation".
While preserving the public ownership, the capital of these banks will be raised by increasing the shareholding of the people in a phased manner through the sale of shares largely through retail to common citizens of this country, he had said.
Government shareholding in various banks varies between 56.26 percent to 88.63 percent.
Sandhu also said that there is a proposal to create an asset reconstruction company (ARC) where some of these banks and the power companies can join hands and can set up a company that will revive incomplete projects and hand it over back to the promoter after revival.
"Similarly for the road sector there is a proposal from the National Highways Authority of India which we have welcomed. They also want to form an asset reconstruction company for the road sector. Because a large number of road projects they are incomplete...And they have not been put to commercial use," he said.
"So with the help of ARCs these projects can be completed they can be put to commercial use and then money can start flowing back. That is another thing that we are looking at," he added.