With the Budget session all set to resume and witness fiery debates on issues including the recently repromulgated controversial land acquisition ordinance, finance minister Arun Jaitley, like his party BJP, was in a combative mode saying the NDA government, through the amendments to the Land Acquisition Act, 2013 only tried to make it pro-poor.
Confident that he is of getting Parliamentary assent for the landmark tax reform — the Goods and Services Tax Bill — within three weeks, Jaitley, who was in Washington DC to attend the International Monetary Fund and the World Bank Group Spring meetings, also told Arun S in an interview that it was important to minimise the discretionary powers of field officers in the tax department to eliminate instances of tax terrorism and boost investor confidence.
Q: The Congress is looking to mobilise farmers and the poor through its Kisan rallies and the ‘Zameen wapsi’ movement stating the land acquisition ordinance and the new Bill is without safety nets for them. They say since the NDA’s proposals include doing away with or dilution of social impact assessment and consent provisions, the new law will facilitate forcible land acquisitions and even provide fodder to Maoists to destabilise development in several regions. How will you counter this criticism inside and outside Parliament?
A: The Congress party’s proposals contained in the Land Acquisition Act, 2013 (the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013) are against the interests of rural India and farmers. Rural India and farmers need rural irrigation, infrastructure, electrification. The Land Acquisition Act, 2013 prevents that. Besides, farmers need better housing, but affordable housing is prevented by the 2013 law. Now there are 300 million landless people in the country. They need jobs. Jobs can only be created if on minimal land, industrialisation takes place in rural areas through industrial corridors. However, the 2013 law prevents that. The Congress leaders make a statement that this Bill or Ordinance is pro-corporate, but it is not true. Proposals for rural infrastructure, for industrial hubs in rural areas, housing for the poor, physical infrastructure in rural areas are indeed pro-poor, they are pro-farmer and pro-rural India. The rich can take care of the land and they can even buy land. The 2013 law was wanting to keep the poor people — be it the farmers or landless — poor in perpetuity. The 2015 amendments correct the anti-poor provisions in the 2013 law.
Q: While you said in your speech here that you are very much aware of the concerns on retrospective taxation, as well as the unpredictability and arbitrariness in tax administration regarding transfer pricing, what are you planning to do about the complaints from investors on tax harassment as field offices have huge powers?
A: We are for minimising discretionary provisions of field officers and encouraging simplification in procedures. We have told tax officials that they should not file appeals in a routine manner and that they should be decisive. Our actions speak for our commitment to a transparent and predictable tax regime and the promise that there will be no retrospective measures. A high level panel was set up for fair treatment of such transactions (falling in the ambit of retrospective amendments). We have brought out Advance Pricing Agreement norms to ensure that tax payers can seek certainty in transfer pricing transactions. We came out with safe harbour rules. Besides, we have opened new benches of the Authority for Advance Rulings. We want to ensure faster redressal of tax disputes before appellate and judicial authorities. Besides, for the sake of certainty, we have deferred the applicability of the General Anti-Avoidance Rules (GAAR) to April 2017 and investments till March-end 2017 have been excluded from the GAAR ambit. As part of our commitment of not being adversarial, we did not contest the Hugh Court judgements that favoured Vodafone and Shell. We cleared the air on the Cairns case (that it was a legacy issue) and the recent issue on Minimum Alternate Tax.
Q: The IMF has raised concerns on the fall in bank credit growth (which at 12.6% in 2014-15 was the lowest since 1995-96) as well as on the high non-performing assets of banks. What is the way out of this situation?
A: Demand is picking up. I have no doubt it will slowly pick up with the kind of economic activity that will happen. We are in touch with banks (Incidentally, the finance ministry is holding a meeting with the chiefs of public sector banks on April 28 to review lending to infrastructure projects and find a solution to all outstanding problems).
Q: The export data for March shows that the growth in shipments have fallen to a six year low. Exports also fell short of the $340 billion target for FY’15 by a whopping $30 billion. Do you see a bright future for export-led growth for the country?
A: That (export performance in March) is only because the global situation has slowed down a little. It is an impact of that. There is nothing to worry. However, India essentially does and will depend a lot on internal demand.
Q: In one of the sessions in the IMF/World Bank Group spring meetings, former US treasury secretary Lawrence Summers gave an analogy of how athletes are at their peak when they grace the cover of the famous Sports Illustrated magazine cover and said from then on most of them experience a downfall in their performance. Contending that great performance in the past does not guarantee similar performance in the future, he warned that India and China’s good growth in the past should not lead to presumption of continuity. He said these countries will revert to slower growth. Do you think India can achieve higher growth rates in the near future?
A: Well, all I want to say is that with all the measures we are taking, I am confident that India will soon attain double digit growth.
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