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DTC seen in April 2012, GST is still work in progress: FM
September, 03rd 2011

The monsoon session of Parliament is almost done with but very less seems to have happened on the reforms front. But this doesn't disappoint Finance Minister Pranab Mukherjee. "I didn't expect bills to be passed in the current session," he told CNBC-TV18's Shereen Bhan in an exclusive interview.

What he did expect was that the Standing Committees would table their reports. "The Standing Committee has finalised its report on the Pension Fund Regulatory and Development Authority (PFRDA) Bill and will be tabled in parliament in this session itself. The Factory Bill will also be tabled and taken care of this monsoon session. The Standing Committee is expected to submit report on the Direct Tax Code (DTC) in winter session and I hope the code will come into effect from April 2012," he pointed out.

Further, talking on a more pressing issue of the Goods and Service Tax (GST), the FM said he had no option but to bring state governments on board for it. However, he was quick to add that the new GST panel chairman was working seriously on the bill.

India, he said, can be the investment destination and perform well if 'we (Opposition and the government)' work collectively and start an important legislation which ought to be enacted.

On the Indian economy, which was deteriorating rapidly according to a Morgan Stanley report, Mukherjee said, "The basic fundamentals still are strong. The export growth too is encouraging despite the global slowdown. However, the corporate sector investment has registered a decline".

Mukherjee aims to bring food inflation to around 7% by March. "I am not complacent on inflation front. But at the same time I am not absolutely hopeless that it cant be managed. With the kind of steps we are taking, I would not like to press panic button." 

Below is the edited transcript of his interview. Also watch the accompanying videos.

Q: I want to pick up on a statement that you made in Parliament. You made an impassioned plea to both the opposition parties as well as to your own colleagues saying that given the global uncertainty, the global weak economic climate, this was an opportunity for India to seize. You havent been able to break the logjam in Parliament. You havent been able to deliver on the bills that you promised you would deliver in this session of Parliament. Are you disappointed, are you disheartened, do you feel let down not just by the opposition, but by your own party?

A: There is no question of being disappointed or disheartened. We shall have to make efforts. I cannot afford to be disappointed or disheartened. I shall have to try to the last to see that the desired goal is achieved.

I do believe that India can be the investment destination. India can perform well, if we collectively work in the different fields, more so in Parliament. While responding to one of the debate in Parliament, I told the entire house that we can change the picture, if we work together.

Q: Are you losing hope that the picture is not going to change?

A: Partly, I am satisfied. I did not expect that I will get these bills passed in this session. I wanted that atleast the report of the Standing Committee be tabled so that I can utilise the period between two sessions to get the approval of the Cabinet and get these bills passed in the winter session.

Q: A month ago, when you met with industry chambers, you told that atleast as far as financial reforms are concerned, six crucial financial sector bills would be tabled in this session of Parliament. Do you believe that promise that you held out is now going to be unfulfilled?

A: It will be fulfilled partly. Pension Fund Regulatory Development Authority (PFRDA), the report has been finalised. It has not yet been placed on the table of the house, but there are four days more. So, it will be placed on the table of the house. So that has been taken care of. The Factories Act is also going to be placed. And that will also be taken care of. Then there are three-four other bills.

So far as GST is concerned, on the tax side, we are on track. We are working. The new chairman of the Empowered Committee of State Finance Ministers has also taken it up with seriousness. Therefore, there has been some progress.

So far as DTC is concerned, I had a discussion with the chairman of the Parliamentary Standing Committee. He is quite confident that DTC Standing Committee report will be available by the winter session. He told me that in this session it would not be possible, but it would be possible in winter session. Even if I have it in winter session, I will have no problem of making it affective from April 1, 2012.

Q: As far as GST is concerned, so far the logjam continues. There has been no consensus. There has to be a plan B in case the states dont come on board. If your efforts fail and April 1 is not realised, what is plan B?

A: We should try and get the sates on board because it is a constitutional amendment. We do not have the number. Mere my intention is not adequate, unless it is backed by the numbers. Therefore, consensus is to be evolved.

I am hammering on that, particularly the principle opposition party. It was in their electoral manifesto. In their election manifesto, it was there. They indicated even the rates 12%. If they come to power, GST will be introduced. Therefore, I am talking to them and saying that you are running a number of state governments, you are also an important component of the Parliament, let us collectively try to achieve this objective. So, we shall have to work hard.

I am not disappointed. But, yes, sometimes it happens in multi-party democratic system, when we have other considerations also. We shall have to take into account that how far we can proceed. Where we have consensus, let us achieve that. Where we have divergence of views, try to remove the divergence and bring it to convergence.

Q: We are in September. Would it be realistic then to say, at this point in time, that DTC will roll out April 1, but you are not feeling particularly confident that GST and DTC will meet their date together? Are we now being realistic to look at DTC from April 1, but not GST?

A: I am always realistic. I am never unrealistic. I made it quite clear a number of times that it is not totally in our hand and which is not in our hand I do not want to raise expectations on that.

My intention is not adequate. My intention, industries intention, if all collected together, is not adequate, unless there is a broad political consensus to amend the constitution and to work out on it.

Why I am hopeful? I am hopeful that there has been agreement and they are working in close cooperation, at this stage, with Nandan Nilekani to have the IT platform in place. We are having discussions.

Recently, there were some problems, and they have given some suggestions about the compensation of the CST. We are in a position to select the successor of the chairman of the Empowered Committee of State Finance Ministers. So, these are the positive improvements. It is being delayed, but we shall have to work for it.

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