Having asked the key infrastructure ministries and major CPSEs to augment and fast-track capital expenditure and front-loading the promised capital infusion in PSBs, finance minister Nirmala Sitharaman on Tuesday said a task force would "speedily identify" the sectors and projects that need immediate funding support.
Stating that the government's focus was on improving the GDP growth "in the next quarter" - the rate of expansion of the economy fell to a 25-quarter low of 5% in April-June - she also hinted at a plan to widen the GST base to boost revenue collections.
Addressing mediapersons here on the achievements of the government on its first 100 days, Sitharaman was, however, non-committal on whether and how the demand for GST rate cuts by the automobile industry would be met at the GST Council meet in Goa on September 20.
She, however, acknowledged that the auto and auto-component sectors might need more succour from the government.
"We are not under-estimating the challenges before us, nor are we sitting idle. The government will try to front-load infrastructure spending as much as possible to increase consumption at all levels,. We have set up a task force to identify projects across ministries and sectors to speed up the infrastructure spending. We are ready with the money," she said.
The government had announced a plan to spend Rs 100 lakh crore for infrastructure over the next five years.
Over the GST collections being below the expected levels, she said: "We need to widen the basket and scope further to see that the collections improve in the future. We are working on ways and means to improve the GST collections."
On the state of the economy, she said, "One has to look at the GDP growth inclusive of inflation rate. If the GDP growth rate is 5% and the inflation too goes beyond 4%, then it is considered to be worrisome. But the inflation has never ever gone beyond 3% or 3.2% (during Modi government 2.0). The ups and downs in GDP are part and parcel of the growth process."
According to the minister, the current slowdown in the auto sector is due to multiple factors including BS VI norms, changing mindset of millennials to go for shared mobility rather than pay for a committed EMI and certain legislation. "But it is for the GST Council to take a call on the rate cuts."
FE had reported earlier that if the industry demand is for an across-the -board rate cut from the highest GST slab of 28% to 18% is to be met, the government’s GST revenue could take a hit of at least Rs 30,000 crore. A report by Kotak Institutional Equities had earlier estimated that a 10% GST cut on automobiles across the board could cost the government Rs 45,000 crore in a year.
The task force on infrastructure spending, comprises secretaries from different ministries and NITI Aayog CEO. It will identify technically feasible and financially/economically viable infrastructure projects that could be initiated in 2019-20.
GST collected in August came in at Rs 98,202 crore, the lowest in the first five months of the current fiscal but the average monthly collection for the April-August period at Rs 1.02 lakh crore continues to be above the rate (Rs 99,083 crore) required to achieve the Centre’s budget estimate (BE) for FY20. The BE, it may be noted, was revised drastically downwards in the regular budget from the level estimated in the Interim Budget.
In fact, the GST has already helped expand the relevant tax base considerably, but the growth in collections hasn’t kept pace with that.
GST registrants who migrated from earlier tax regimes was 58.5 lakh, but the GST base as of June 2019 was 1.23 crore, including composition-scheme taxpayers of 17.6 lakh.