Arun Jaitley pledges rational tax policy, changes in labour laws, fuel price deregulation and natural resources auctions
November, 10th 2014
India will pursue an aggressive reforms agenda over the next few months to help get the country back to a high-growth trajectory and on the radar of investors, finance minister Arun Jaitley said, promising a reasonable and rational tax policy that will not be "ultra-aggressive" to help further improve sentiment.
"Government has its plate full with respect to reforms for the next few months," Jaitley said in Delhi on Sunday. "Aggressive reforms will help India to grow faster... Hope India will get back on the investors' radar."
The government is looking to alter the land acquisition law as part of reform efforts and is in the last stages of discussions with states on changes to the constitutional amendment bill required for the long-awaited goods and services tax to become a reality.
Arun Jaitley pledges ‘rational’ tax policy, changes in labour laws, fuel price deregulation and natural resources auctions The government has already embarked on changes in labour policy, fuel price deregulation and natural resources auctions among others.
Jaitley exuded optimism that the insurance bill, seeking to raise the foreign direct investment cap, will be passed in the upcoming session of Parliament.
Speaking at the India Global Forum organised by the International Institute for Strategic Studies, the minister said the Indian economy faces challenges but expects growth to improve next year.
"Economy was and is in a challenging situation and one of the principal challenges before us is to restore the confidence in the Indian economy, to expand economic activity and move towards increasing the growth rate," he said, adding that growth next year will be a "little better". If the trend continues, India could well be restored to a high-growth path.
Streamlining the tax regime and ending uncertainty is a critical part of making India more attractive to investors."We have seen the challenges before the economy. A reasonable and rational tax policy (is needed), it can't be ultra aggressive with tax payers," the minister said. The tax department now follows the principle that those who have to pay tax should do so and those who don't have to should not be harassed for non-payment, he said. He also spoke of the rationale behind Prime Minister Narendra Modi's Make In India manufacturing initiative.
"We have realised that one of the greatest challenges we have is the manufacturing sector. The economy had touched a new low and therefore the manufacturing sector is itself is delicately poised in India. We have to eventually try and make India a hub of low-cost manufacturing," he added.
He also said the government will amend the tough land acquisition law as it looks to restore confidence in the economy. "Some changes may be necessary. We will first try to reach a consensus and if that is not possible we will go ahead and take the decision." The Land Acquisition Bill has been widely criticised by industry as also state governments and central departments for stalling project development. Jaitley said that "obstacles" to land laws would have to be first removed in order to implement the concept of smart cities in India. Alluding to recent reform measures including the coal ordinance, he said the government is giving finishing touches to a reworked mining law.
He said there is a need to follow the e-auction route for the allocation of natural resources to make the process transparent and eliminate corruption.
Allaying skepticism about disinvestment remaining on track, the finance minister said the programme will "unfold" in the next few days. He added that the government aims to lower its equity in public sector banks to 52%.