According top priority to the implementation of GST, Finance Minister Arun Jaitley on Wednesday sounded confident on the tax rates coming down once the indirect taxation regime is put in place.
The challenges before the government, he said, is to put public sector banks back on track and continue to operationalise stalled infrastructure projects to further boost economic activity.
As regards the implementation of Goods and Services Tax from April next year, the Finance Minister said, “We look ahead, it’s a very stiff target, we are running against time. I would certainly like to give it a try.”
“It (GST) will the plug the leakages. In the long run it will probably stabilise the tax rate and move them down once effectively implemented,” he added.
Speaking at the event, ‘The Economist – India Summit 2016’, Jaitley said the procedural formalities of collecting proceedings of all the states and sending it to the President for ratification are on.
Once the assent is granted by President Pranab Mukherjee, the constitution amendment bill will have to be notified.
After notification and constitution of the GST Council, he said, there are obviously some pending issues, which the council will have to resolve.
“If you ask me in terms of economic priorities even outside Parliament, I would say that certainly implementation of GST is the top priority, putting the bank on track is a very important priority and the stalled projects, a lot of them have been cleared and this process must continuously go on… I think these are the obvious priorities,” Jaitley said.
Talking about state-owned banks, he said, India is not ready for their privatisation and present characteristics of PSU banks will continue except for IDBI Bank.
“We are trying to consolidate some of the banks, which may otherwise find it difficult in a competitive environment,” he said.
Asked why privatisation in financial space is not taking place, Jaitley said, “In order to reach a particular level of reform you have to evolve into that stage of public opinion… in funding large part of social sector in India, public sector banks, despite competition had a far larger contribution.”
According to Jaitley, the public or political opinion is still to converge to a point where one can start thinking in terms of any form of privatisation in the sector.
“Some selective reforms do take place, for instance, we have announced a policy that government holdings (in banks) to be brought down to 52 per cent,” he added.
On stressed assets, he said the Centre has initiated a large number of steps to reduce NPAs.
“There is not a single sector that we have left out in terms of resolving issues… if you were to ask me after the passage and may be possible implementation of GST, while that process is on what would be my priority at the moment, it is certainly the health of public sector banks,” he said.
He also hinted that the government is ready to provide an additional capital over and above Rs 25,000-crore amount announced in the Budget.
“This is over and above whatever assistance from the Budget we are giving towards the capitalisation of banks,” he said.