Union Finance Minister P. Chidambaram on Wednesday said that the fiscal consolidation roadmap for the Centre has been laid out and the Government will not breach the Fiscal Deficit limits.
Speaking at the sixth Pre-Budget Consultation Meeting with the Finance Ministers of States and Union territories, Chidambaram highlighted the challenges that economy is currently facing and the urgency of reform measures that are needed to address these challenges. He also drew the attention of participants to the consequences of high Fiscal Deficit.
He said that the second major challenge for the economy was the high Current Account Deficit (CAD) level. Stressing on the importance of foreign investment to ensure economic stability, the minister said that foreign investment is not an option but an economic imperative.
States were requested to fast track clearances required for investment proposals. Chidambaram said that by taking up concrete measures to tackle these challenges, 2014 would be a better year.
Chidambaram also highlighted the benefits of Direct Benefit Transfer scheme and informed the roadmap for expansion of the pilot. He lauded the efforts of the State Governments and District administration of the pilot districts. He informed that even States can use this platform for benefits given by them.
Chidambaram informed the participants that an extensive exercise to rationalise Centrally Sponsored Schemes is on and that, in his personal opinion, all smaller schemes should be transferred to States. He stated that the Fourteenth Finance Commission has been constituted and he hopes that Finance Commission will recognise the primacy of the Centre in the area of external and internal security and national issues and the primacy of States in development issues.
The finance ministers of States/UTs later raised a series of issues. Many states raised the issue of roadmap for GST and CST compensation, and gave specific suggestions about Central Schemes and unanimously supported rationalisation of Centrally Sponsored Schemes. Some States made specific observations about Terms of Reference of Fourteenth Finance Commission and suggested specific tax changes to promote specific sectors in their regions.