Arun Jaitley outlines economic road map for NDA's second year in office; reasonable taxation top priority

New Delhi: Making taxation more reasonable and improving ease of doing business will be among his top priorities going ahead, Finance Minister Arun Jaitley said on May 17, as he outlined the economic roadmap of the Modi government for its second year. The government will also strive to eliminate discretions and maintain the speed of reforms, Jaitley told PTI in an interview.

The Finance Minister also dismissed any perception that nothing has moved on the ground on policy front in reviving the economy and said that such a view was confined only to a section of critics. Answering a question about voices from India Inc complaining that the government was not walking the talk, Jaitley said there was no such "overwhelming perception".

Some of the reports complaining about the economy not having taken off were "inspired news items referring to a dozen people without naming a single", he said. The Minister said that a section of corporates voicing disappointment were those who were used to a "system of largesses".

On taxation, Jaitley said, the effort would be to make it "more reasonable". The government, which came to power in May last year, plans to roll out a common GST by April 1, 2015 on indirect taxes, while corporate tax rate would be brought down to 25 per cent from 30 per cent over a period of four years on the direct taxes, he added.

The government also intends to eliminate the exemptions while reducing the rate of corporate tax, though these would be retained for the individual taxpayers. "I would keep exemptions but keep that for individual tax payers and in the last two years I have strengthened the kind of exemptions," he said, adding it would help in increasing demand and promoting growth. Speaking about the challenges before the government, he said: "One, there is a huge road map how to ease your doing business here...I would say (that) is work in progress".

To help boost private investment and improve execution of projects, the effort would be to replace the practice of giving permissions and push the pending legislations like GST and the land acquisition law, Jaitley said. A bankruptcy code is also being proposed to help companies exit the projects in case of difficulties, he said.

The Minister also said that the previous UPA government followed an "erroneous road map" and focused on populist policies, while it also seemed indecisive and ineffective that eventually hit the credibility of decision making process.

"We had fallen off global radar and policy decisions were influenced by collateral thinking and if I may use the phrase, which some persons in Congress party use, they abandoned liberalisation and went in for cronyism. So whether its was spectrum, coal this is all examples of cronyism," he said. On the other hand, there are no "forces outside the government which can influence the governmental thinking" in the current dispensation and the responsibility begins and ends with the government, he said.

Jaitley said the Modi government is ending the first year in office by eliminating discretions in as many areas as possible and it was pursuing a liberalisation without any discretion and crony capitalism. "As a result we have crossed one year without anybody even attempting to make serious or a non-serious allegation of corruption. So its a fair government (following) a clean process," Jaitley said.

Jaitley said the positive signs on macroeconomic front are there and the growth rates are going to pick up. Referring to the perception that government had done nothing on ground on policy front, he said, on the contrary it has been able to restore credibility of the economy through quick decision making and further opening of doors to domestic and international investment and expressed confidence that GDP will expand by over 8 per cent this fiscal.

"There is no such overwhelming perception... The perception is essentially amongst a section of the critics. "Because that section of the critics will say, this (decision) is a favour to corporates and the next day he will say corporates are unhappy. The two things cannot co-exist."

"On policy whatever could be done has been done. In fact I doubt if any other government since 1991 (has brought in) a significant change. Post that period, in the first year, if anybody has been able to take so many steps (it is NDA government) and we intend to maintain that speed," he said. However, global slowdown and weather vagaries posed a challenge to the Indian economy.