The National Democratic Alliance (NDA) government will push forward with a number of key reform measures through the next year, including Bills on public procurement, a bankruptcy code, resolution of contracts and enhancing ease of doing business at the entry point, Finance Minister Arun Jaitley said on Friday.
Speaking at a press conference to mark the completion of a year of the NDA government, Jaitley said one of the government's priorities was to get a constitutional amendment Bill for a goods and services tax (GST), as well as amendments to the land acquisition Act, passed in the monsoon session of Parliament. "We have a clear road map for the next year. The first priority is to get the constitutional Bill on GST passed in the Rajya Sabha and the land Bill passed in Parliament. We have to start stalled projects. There is work to be done on as many as 16 stuck highway projects," he said.
In what was the first of many public events and media interactions planned by the Centre, Jaitley claimed a year of "decisive and corruption-free" governance had set the stage for double-digit economic growth.
Jaitley struck a conciliatory tone towards investors, promising to tax corporate profits at competitive rates. "We must ... remove discretion, phase out exemptions and bring the effective rate down to global levels," he said.
He attacked the Congress for positioning itself as anti-growth and anti-development by obstructing the GST Bill, as well as amendments to the land acquisition law. "A year ago, there was an environment of pessimism. There was a general environment of gloom. In its place, an environment of enthusiasm has been created," he said, adding decisiveness, even in the face of obstructions, was the hallmark of the NDA government. India, he said, "has potential to touch double-digit growth", provided decision-making was quick.
"Those who are used to slow decision-making are criticising it (the government) for making fast decisions...the country is not willing to accept slow decision-making…There is absolute clarity of direction in which the government wants to go, to promote growth and development and bring in more transparency in governance," he said.
The government, he said, intended to use "taxation as an instrument for promoting growth." Terming GST a "historic" reform, he said most states were on board on this issue, adding the Centre would make all efforts to roll out the new tax regime on April 1, 2016.
"Though the matter of GST going to a select committee is cutting it too fine, in terms of the roll-out target, we are still confident we will meet it." The constitution amendment Bill was referred to a select committee, which is scheduled to give a report to the Rajya Sabha on the first day of the next session of Parliament. The Lok Sabha has already approved the Bill.
On direct taxes, Jaitley said the government planned to cut the rate of corporate tax from 30 per cent to 25 per cent through a period of four years, to bring it at a par with global levels and reduce discretionary exemptions. For individuals, Jaitley said, leaving more money in the hands of the people would be good for the economy, as their savings aided development efforts. The revenue department would come out with revised and simplified income tax return forms, he added. On Minimum Alternate Tax, Jaitley expressed hope that various legacy issues that had led to hurdles for investors would end soon. The minister lauded his government's efforts in turning around key economic indicators such as the country's fiscal deficit, growth in gross domestic product, the current account deficit, and inflation. He said the quality of fiscal deficit, too, had improved, as there were no unusual hidden items or carried-forward pending expenditure.
Asked whether it was time for Reserve Bank of India Governor Raghuram Rajan to cut interest rates sometime around the next monetary policy review on June 2, Jaitley quipped, "You are asking the right question to the wrong person." He said it was time for a rate cut.
On the non-performing assets (NPAs) of major banks, he said: "A good signal has emerged --- in the quarter ended March, NPAs have started coming down…I would take it (a drop in NPAs in the March quarter) only as an initial indicator. At times, when you try to revive the economy, some indicators can always be patchy...I am not drawing any final conclusion from this. If this pattern continues through two-three-four quarters, I will draw a conclusion that there is a pattern. I am keeping my fingers crossed."
Jaitley took credit for strengthening relations between the Centre and states through "cooperative federalism". He also mentioned the NITI Aayog, the increased devolution to states, courtesy of the recommendations of the 14th Finance Commission, and the proceeds to states from the coal auction of mines. On India's ties with other countries, Jaitley said the country had taken the lead in rescue and relief operations in Yemen and Nepal. India's efforts in dealing with crises in different parts of the world were appreciated globally, he added.
WHAT JAITLEY SAID
- You have asked a very good question (on a cut in interest rate) but to a wrong person. My views are well known. It is (time to start reduction in interest rate).
- We must ... remove discretion (on corporate tax), phase out exemptions and bring the effective rate down to global levels.
- It would have been appropriate if the previous government and FIIs in 2012 could have found a judicial solution (to the MAT issue).
- The country is not ready to accept a slow pace of decisions. There is absolute clarity with regard to the direction in which the government wants to move.
- The main opposition has positioned itself against the government's pro-growth and developmental initiatives.