Singapore: The biggest threat to reforms in India is an unstable government at the Centre after 2014 elections, Finance Minister P Chidambaram said today reaffirming government's commitment to reforms and confidence about passage of pension and insurance bills in Parliament's Budget session beginning next month.
"Behind the noise" there were quiet negotiations with the Opposition parties and support from them on these legislations, according to a note by Bank of America Merrill Lynch, who co-hosted an investor conference with DBS.
Addressing over 300 city-based FIIs, debt investors and corporates, Chidambaram, who is on the second leg of his east Asia tour wooing foreign investment, said the goods and service tax (GST) regime is a major reform and hoped that the legislation would be approved by Parliament in the winter session in December this year.
He acknowledged that the GST Bill was unlikely to be passed by April 2013 but hoped to introduce in the monsoon session and get it passed in the winter session of Parliament based on a consensus with states. While efforts would be made to widen the tax base, Chidambaram expects the government revenues to rise by 20 percent every year though not by raising rates but by through stable tax regime, non-adversial compliance and fair dispute mechanism.
He said the fiscal target in 2012-13 would be maintained at 5.3 percent of the GDP which would be achieved through cost cuts and austerity measures. The Finance Minister promised a 0.6 percent reduction in the fiscal deficit every year to bring the deficit to 3 percent by 2016-17 without raising tax rates.
He expected the GDP growth rate to be 5.7 percent this year and around 6-7 percent in 2013-14 and 8 percent in 2014-15.