New Delhi: Economists and bankers on Tuesday urged finance minister Arun Jaitley to make next year’s annual budget “full of out-of-the-box ideas” and announce immediate measures to help labour segments like vegetable growers and brick kiln workers, who have been hit the hardest by demonetisation. Their calls came in meetings that took place in the finance ministry offices as part of the customary pre-budget consultation process. The government has advanced the budget-making exercise, in keeping with plans to present the budget on 1 February so that projects can be implemented at the earliest possible.
According to a finance ministry statement issued after the meeting, bankers said while the overall mood on demonetisation in rural areas including among the farmers is largely positive, four sectors needed special attention. These are vegetable growers, who depend on cash for their day-to-day dealings and can’t store their crop for long; brick kiln workers, who used to be paid in cash, transport industry in rural India; and plantations in South India.
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According to the statement, economists, who attended the meeting said that this time the Union budget should not be a conventional one as these were not the normal times. “Rather the government should make best use of the opportunity arising from demonetisation to present a Budget full of out of box ideas,” it said, quoting the economists.
Participants suggested that provisions should be made in the budget to ensure that black money is generation curbed. Some also expressed the need for transparency on the government’s part and wanted it to come out with a statement in the budget detailing what costs have been incurred due to demonetisation, including the cost of printing new notes and lost toll charges.
Commenting on demonetisation, some economists said that while it can temporarily curb black money, it can’t check the generation of black money in the future. “So, next task should be to stop generation of black money in future. For this, the government should incentivize people to move from informal to formal system and maximize use of e-payments,” they said.
Given that demonetisation may lead to a decline in saving rates as liquidity in banks have improved, bankers present in the meeting urged the finance minister to safeguard savings of senior citizens as they are the most vulnerable. “So, some sort of exemption needs to be given to them under the Income Tax Act so that they have a decent income through their deposits,” they said.
They said the fiscal deficit should remain at 3% of gross domestic product.