There was a “restlessness” in the country for higher economic growth, finance minister Arun Jaitley said on Friday, even as he outlined the government’s plan to unleash a slew of reforms to propel growth in the second year of the government. The minister also reaffirmed a commitment to launch more social-security schemes.
Celebrating the initial revenue figures for the current fiscal, especially that on the indirect tax front, being robust, the minister said this could potentially increase the government’s spending capacity, adding that a likely pick-up in consumer confidence would supplement this.
He listed out the plans: Disinvestment will be aggressively pursued to keep pace with the R69,500-crore target and some hotels could be privatised; major ports now governed by trusts would be corporatised on the lines of Ennore port; a new bankruptcy code would be launched soon to speed up redeployment of assets for productive use; government procurement — which accounts for a quarter of the GD — would be made transparent with a new law that would introduce auctioning; and the boards of state-owned banks would be professionalised.
Claiming that the Narendra Modi government succeeded in dispelling the gloom that pervaded the economy when it took over, Jaitley said it provided the country with clarity of direction towards growth and all-round development.
The government showed “decisiveness even in the face of political obstructionism”, he said, adding that it would “make every effort” to introduce the goods and services tax from April 2016 as scheduled, and expressed the hope that the contentious Land Acquisition Bill would also be passed by Parliament without delay.
Subsidy rationalisation, key to improving government finances, was being pursued also, the minister said, adding that the leakages in LPG and fertiliser subsidies have been minimised thanks to the direct benefit transfer (DBT) scheme that weeded out some 3 crore bogus “household LPG connections”. Neem-coating of urea reduced the subsidy bill as well, he said. The savings from subsidy rationalisation would be used for infrastructure spending, he said. Further rationalisation of LPG subsidy and higher public spending on rural infrastructure, irrigation, highways and roads were also on the cards.
“Government decision making will be at an arm’s length from individual business houses,” Jaitley said, calling crony capitalism a thing of the past. Describing “tax as an instrument for promoting growth”, the minister said high tax rates were not economy-friendly. Referring to the ongoing tax disputes — over minimum alternate tax on foreign portfolio investors and retrospective tax on indirect transfers of Indian assets — he said these were “legacy issues” best left to be decided by legal process.
Jaitley was bullish on stake sales in state-run enterprises. “Disinvestment proposals which could fetch over Rs 50,000 crore are already approved and are in the pipeline,” he said. Last year, Rs 24,277 crore was raised through PSU stake sales. Jaitley said the disinvestment department was examining strategic disinvestment (privatisation) proposals regarding some hotels. This, sources said, could include Ashok properties in Ranchi and Bhubaneswar.
During the previous NDA government’s regime also, state-run hotels were sold to private parties but the move attracted criticism as these hotels — two Centaur hotels in Mumbai and the Laxmi Vilas Palace in Udaipur — were resold by the buyers at much higher prices shortly thereafter. The CBI which probed the Centaur sales found no criminality involved and gave a clean chit to the then government managers.
Resolution of disputes over large public contracts and making it easier to start a business were also among the government’s priorities, Jaitley said. Social security programmes were not an election-eve gimmick but a long-term issue for the government, he said. Under the JanDhan scheme, more than 15 crore people have opened bank accounts and Jaitley hoped the Pradhan Mantri Jeevan Jyoti Bima Yojana life insurance scheme and the Pradhan Mantri Jeevan Suraksha Bima Yojana will have a wider reach. These schemes have in the last 12 days seen 7.5 crore people signing up. Stating that only 20% of Indians have some form of insurance cover and pension penetration is a dismal 11%, the minister said these need to be expanded.
Tax demands to multinationals like Vodafone and Cairn under the 2012 retrospective changes in the law meant to tax offshore sale of Indian assets and the tax department’s recent order to foreign portfolio investors asking them to pay 18.5% MAT on their trading income here are among the “tax legacy issues” Jaitley mentioned. The latter is being addressed by a three-member panel led by justice A P Shah set up on Wednesday.