IBPS PO Mains 2016 - English Language

Directions (Q. 1-5) : Read the following passage carefully and answer the questions given below it.

The finance ministry on Monday said the Union budget would be growth-oriented, implicitly signaling that it will address the investment crisis in the Indian economy.

“Given the fiscal constraints and other parameters under which the government has to function, the effort of the government is to present a budget which is growth-oriented, that maintains the momentum of growth and tries to develop on it,” economic affairs secretary Shaktikanta Das said in an interview with DD News uploaded on YouTube on Monday.

According to Das, the budget will also detail new measures to support ongoing programmes such as Start-up India, Standup India, Make In India, Digital India and the Skill mission – all of which have a strong focus on creating jobs.

Finance minister Arun Jaitley will be presenting his third budget on 29 February at a time when private investment has dried up and the exchequer has had to incur higher expenditure due to implementation of the One Rank One Pension scheme for the armed forces and the recommendations of the Seventh Pay Commission.

That may cramp the government’s ability to accelerate public investment to revive economic growth while sticking within the confines of its fiscal deficit targets. Some parts of the government believe that the emphasis should be on growth and not fiscal consolidation. Other parts, and the Reserve Bank of India, believe the finance minister should adhere to his fiscal commitments made in the last budget.

Without revealing whether the government will digress from the path of fiscal consolidation, Das said the government’s priority is to take a balanced view on “the expenditure requirement to keep our growth momentum and to what extent we can borrow’. Care Ratings chief economist MadanSabnavis said the government has to increase its allocation for public investment on infrastructure to stimulate growth. “I expect government to spend Rs.10,000-20,000 crore additional amount on infrastructure. Given nominal GDP (gross domestic product) is not expected to expand significantly, the leeway for the government to spend more may not be there while keeping fiscal deficit within 3.7-3.9% of GDP. So I don’t expect a big-bang push for infrastructure spending given the fiscal constraint,” he said.

The finance ministry revealed more contours of its budget when minister of state for finance JayantSinha, also in an interview to DD News, said the four pillars of the budget will be poverty eradication, farmers’ prosperity, job creation and a better quality of life for all Indian citizens. ‘This budget will be a forward looking budget that will ensure that India will continue to be a haven of stability and growth in a very turbulent and choppy global economic environment,” he added.

The government has been contemplating tax incentives to companies in the manufacturing sector, including tax deductions on emoluments paid to new employees, to encourage firms to step up hiring and create jobs under its Make in India initiative. The government published suggestions that it has received internally from various government departments and other stakeholders on the mygov.in website, seeking further ideas and comments from the public.

Suggestions being considered by the government include financial incentives, tax incentives under the Income Tax Act, 1961, and subsidies for equipping employees with job skills, and upgrading and improving employment exchanges. Another suggestion is to expand the scope of the tax deduction currently available to companies that add at least 10% to their workforce in a year by lowering the threshold. This incentive is available only in cases of employees who earn less than Rs.6 lakh a year.

(The topic of the Passage asked in the exam was based on Infrastructure Investment)

What is the main objective of the government to create the Union Budget?