GDP growth may cross 7.3 per cent this fiscal: Arun Jaitley

Dubai: India’s economic growth is expected to exceed 7.3 per cent in the current fiscal year and the government will try to convince opposition parties to pass a blocked tax reform, Union finance minister Arun Jaitley said on Monday. “The Indian economy is expected to grow better than 7.3 per cent — the level achieved last fiscal year — and even at a higher level next year,” Mr Jaitley told investors at an Arab-India Economic Forum meeting in Dubai.

India has become the fastest growing major economy in the world, surpassing China that held this tag for decades. The Indian government believes that the economy has the potential register a double-digit growth. The economy grew its fastest pace at 10.3 per cent in 2010, but slowed down in the subsequent years. Economic growth, Mr Jaitley said, will come despite weakness in rural demand due to poor rainfall in the last two years.

A drought has also caused shortages that have led to a spike in prices of pulses and vegetables. India’s retail inflation surged to a four-month high in October and industrial production grew at a slower-than-expected pace in September, latest government data shows. In a bid to speed up growth, India last week eased foreign direct investment norms in 15 major sectors, including mining, defence and civil aviation.

But foreign and domestic investors are worried the government’s reform agenda could face renewed political opposition after Prime Minister Narendra Modi’s BJP lost a key state election this month in the state of Bihar. In an apparent bid to calm such fears, Mr Jaitley said he would persuade opposition parties to pass a business-friendly goods and services tax.

“The process of economic reforms is a continuing one, no reform legislation is stopped in Parliament in past though delay may occur ... make efforts with opposition to get GST passed by the Rajya Sabha,” Mr Jaitley said.

The GST is expected to create a single market in the country that could add up to two percentage points to GDP but is blocked in parliament.

The key demands of the Congress, which is holding back the GST Bill in the Rajya Sabha, are fixing an 18 per cent cap on GST rate to prevent the GST council from increasing the tax in future; scraping the proposal to levy an additional one per cent tax; including tobacco and tobacco products, alcohol for human consumption under GST; and increasing the representation of states in the GST council to ensure that it is not unduly tilted in favour of the Centre.