Finance Minister Arun Jaitley on Sunday outlined the road map for the second year of the NDA government which includes making taxation more reasonable and improving the ease of doing business in India.
Maintaining the speed of reforms and eliminating discretions would be the thrust areas of the government going forward as it completes one year in office, he told PTI in an interview.
The Finance Minister also dismissed any perception that nothing has moved on the ground on the policy front in reviving the economy and said that view was confined only to a section of critics.
- India has potential to achieve 7-8% growth: Arun Jaitley
- Arun Jaitley responds to Chidambaram: In UPA, economy was under a terrible doctor
- FM Arun Jaitley defends capital gains tax, GST implementation
- Chidambaram accuses govt of worsening fiscal deficit, Jaitley defends with IMF data
- Highlights — All major announcements of the Union Budget 2018
- Budget 2018 highlights: Proposals should have been bold, radical; this is a big let down, says Congress
Answering a question about voices from India Inc. complaining that the government was not walking the talk, Jaitley said there was no such “overwhelming perception”.
Some of the reports complaining about the economy not having taken off were “inspired news items referring to a dozen people without naming a single”, he said.
A section of corporates voicing disappointment were those who were used to a “system of largesses”, according to the Minister.
As for taxation, the Minister said, the effort would be to make it “more reasonable”.
While on the indirect tax side, the government proposes to roll out the GST by April 1, 2016, on the direct taxes side the Minister said that the rates for corporate tax would be brought down to 25 per cent from 30 per cent over a period of four years.
The government also intends to eliminate exemptions while reducing the rate of corporate tax, though these would be retained for individual taxpayers.
“I would keep exemptions but keep that for individual tax payers and in the last two years I have strengthened the kind of exemptions,” he said, adding it would help in increasing demand and promoting growth.
Speaking about the challenges before the government, he said: “One there is a huge road map how to ease your doing business here…I would say (that) is work in progress”.
Besides pushing the pending legislations like GST and the land acquisition law, Jaitley said, the effort would be to replace the practice of giving permissions through a regulatory mechanism.
That would help in boosting investment and improve execution of projects, he added.
The government, Jaitley said, was also proposing a bankruptcy code to help companies exit the projects.
Referring to the perception that government had done nothing on ground on policy, he said, on the contrary it has been able to restore credibility of the economy through quick decision making and further opening of doors to domestic and international investment and expressed confidence that GDP will expand by over 8 per cent this fiscal.
The government, he said, has taken all possible policy decisions.
“There is no such overwhelming perception. The perception is essentially amongst a section of the critics. Because that section of the critics will say, this (decision) is a favour to corporates and the next day he will say corporates are unhappy. The two things cannot co-exist,” Jaitley said.
“On policy whatever could be done has been done. In fact I doubt if any other government since 1991 (has brought in) a significant change. Post that period, in the first year, if anybody has been able to take so many steps (it is NDA government) and we intend to maintain that speed,” he said.
However, global slowdown and weather vagaries posed a challenge to the Indian economy.
“Obviously economy takes its own time… When you take a step, the step translates over a period of time and particularly when the global environment is one of a slowdown.
So if you are targeting 7.5-8 per cent growth rate in a slowdown environment, I think its a good positive,” he said. The problem with the UPA government was that there was no clarity about the direction among those who dominated the political thinking, Jaitley said, adding they followed an “erroneous roadmap” and focused on populist policies.
Besides, he added, the UPA government seemed indecisive, ineffective and as a result the credibility of decision making process suffered seriously.
“We had fallen off the global radar and policy decisions were influenced by collateral thinking and if I may use the phrase, which some persons in Congress party use, they abandoned liberalisation and went in for cronyism. So whether its was spectrum, coal this is all examples of cronyism,” he said.
The NDA government, he said, brought about complete clarity about the road map and took decisions, both executive and legislative.
“A series of decisions we have taken are aimed at one direction. There is no contrarian direction, no blurriness, there is no confusion there is complete cohesion.
“There are no forces outside the government which can influence the governmental thinking… The responsibility begins and ends with the government,” he said, adding that the government has to cover a “huge amount of agenda”.
The Modi government, he said, has ended the first year in office by eliminating discretions in as many areas as possible.
“…that’s the difference between liberalisation without discretion left in the government and crony capitalism. As a result, we have crossed one year without anybody even attempting to make serious or a non-serious allegation of corruption. So its a fair government (following) a clean process,” Jaitley said.
Jaitley said the positive signs on macro economic front are growth rates are going to pick up. “They picked up last year, they are going to pick up this year. So we are going to have better growth rates than anywhere in the world,” he said.
“I expect fiscal discipline and prudence to be under control. I did apply the brakes in the first year and the principle is that initially that if you start on a conservative note, you will have a lot to preserve and benefit in the future years.
“So fiscal deficit indications look good, under control, CAD under control, inflation under control. And it is not only fuel related inflation, but also food inflation under control,” he said.
On growth estimates, he said the Economic Survey talks about 8 to 8 per cent plus growth.
“The initial revenue indications, the preliminary indications have come in the month of April, that seems to be fairly okay,” he said.