Arun Jaitley picks growth over deficit

“I would stick to my fiscal deficit target of 3.9 per cent (of gross domestic product) this year and the priority will be to spend whatever resources the government has within the fiscal deficit target,” said the 62-year-old lawyer told Reuters in Dubai.

This stance marks a departure from the government’s attempts to further reduce fiscal deficit as corporate India with strained balance sheets lacks required firepower to push India’s economic growth.

The government, Mr Jaitley said, would prefer to channel buoyant tax receipts into infrastructure spending rather than slash its deficit target. He, however, declined to be drawn on the fiscal deficit target that the government would set at its next Budget.

After the recent defeat in Bihar Assembly elections, the government seeks to regain the initiative to acheive faster growth to create work for the one million young Indians who enter the workforce every month.

With regard to the GST Bill, Mr Jaitley said the government was ready to discuss all issues with the opposition to would pave the way for the creation of single market in the country.

“Without compromising on the architecture itself, and keeping a general consensus between the states and the Centre in mind, I think a discussion is reasonably possible,” he told the news agency, signalling flexibility over a proposed state levy that some say would make the tax complex to administer and defeat its original aim of cutting red tape. The enactment of Goods and Services Tax (GST) is expected to add an extra two percent growth to the economy

Mr Jaitley was in Dubai to attract investments from deep-pocketed Middle Eastern sovereign wealth funds. He invited Abu Dhabi Investment Authority (ADIA) to invest in National Infrastructure and Investment Fund (NIIF). The new fund is mandated to hold 49 per cent stake in infrastructure projects, which are finding few takers in the heavily indebted private sector.

According to a statement issued by the finance ministry, ADIA managing director Sheikh Hamed Bin Jayed Al Nahyan showed interest in investing in NIIF.

Mr Nahyan reportedly said that his officials will be visiting India on November 19 to discuss this matter further. The statement also claimed that ADIA was interested in investing for setting strategic oil reserves at Mangalore Port in Karnataka.