NEW DELHI: With the share of states in Central taxes seeing a quantum jump, Finance Minister Arun Jaitley on Monday asked state finance secretaries to maintain fiscal discipline.
Noting that meeting the 3.9 per cent target of 2015-16 has brought immediate gains of lower interest rate and better credibility in the global economy, Jaitley advised them to spend on infrastructure and development activities and to use Aadhaar for transferring benefits to people.
Speaking at the second conference of state finance secretaries, Jaitley said, “All of us will have to spend within means. We have seen that ever since we have shown this tendency of spending more yet sticking to fiscal discipline, this has brought immediate results in terms of interest rates and India’s credibility.”
The Centre has decided to lower the fiscal deficit to 3.5 per cent of the gross domestic product in 2016-17.
“The tendency to spend on non-developmental activities may in the short term appear to be attractive but in longer run it doesn’t reap results,” he noted.
The states’ share in Union taxes has substantially gone up after implementation of the 14th Finance Commission report. The FC recommended a record 10 per cent increase in their share in the Union taxes to 42 per cent.
Talking of the manner in which resource must reach people, Jaitley said greater reliance on Aadhaar-based direct benefit transfer is going to be a clear agenda in future.
Jaitley marks focus areas for spending
Finance Minister Arun Jaitley said national focus is on larger expenditure on social sector, infrastructure creation and rural areas, which have conventionally been found lacking in the past. “And therefore we must focus on specific expenditure in those areas,” he said.