Subsidies will never get us ahead: Piyush Goyal

Giving subsidies and tax breaks are not the answer to improve India’s global competitiveness and increase exports, Commerce and Industry Minister Piyush Goyal said on Saturday at a time when several manufacturing industries are lobbying with the government for fiscal support.
“Subsidies are never going to get us ahead,” Goyal said. “In my six years of engagement, I have not found subsidies to be the solution to India’s problems. I think it’s quality, technology, growth, and scale.”

He was speaking during the launch of a report by the India Exim Bank that highlighted policy constraints for exports in several sectors.

“Sometimes, for a short period you may need to give a little thrust or support. But if they are looking at literally running long term engagement with the world on subsidy – not going to work,” Goyal said on suggestions of tax breaks and duty-free imports for industries to boost exports.

Where will the revenue come from for the government to compensate for the suggested tax breaks, the minister questioned?

Notably, the automobile industry has been lobbying with the government for a reduced GST rate to spur demand and to boost exports.

However, the centre has been falling behind on GST collection due to the economic impact of the coronavirus pandemic. According to the data released by the Controller General of Accounts (CGA), fiscal deficit, the gap between expenditure and revenue, during April-August was at 109.3% of the annual target estimated in the Budget. In absolute terms, the fiscal deficit was at Rs 8,70,347 crore.

The minister instead sought “out of the box” suggestions like possible free trade agreements with other nations and sectors where India will have inherent advantages like enough domestic demand to generate economies of scale.

Suggestions should be “less sermonizing, more action-oriented,” Goyal said. “We welcome ideas, action-oriented suggestions, doable, practical, nose-to-the-ground ideas.”