After talking up India’s Goods and Services and demonetisation to by and large captive audiences in Columbia University and Harvard, Finance Minister Arun Jaitley told a Washington DC audience of institutional investors that India is a more liberal and open economy than many others and proven in the last three years (of BJP rule) that it is willing to take tough decisions despite short term pain.
Jaitley spoke at an ‘India Opportunity’ event put together by Federation of Indian Chambers of Commerce and Industry (FICCI) at the IMF headquarters in Washington DC where the annual Fund Bank meetings are on.
“The India growth story is led by the private sector, unlike in China where the story is about public sector-led investment. The Indian government is giving the private sector all the space to come in and invest,” FICCI Secretary General Dr Sanjaya Baru said.
Speaking at the same forum, Secretary, Department of Economic Affairs, Subhash Chandra Garg termed India a “haven of macro economic stability”.
“There is some concern about growth but the new data that’s coming out shows recovery is back. This is a country today where the boldest structural reforms are getting done. Believe me, getting 29 states together into one single tax system that is now fully computerised is a huge challenge…”, Garg said speaking on the ambitious rollout of the Goods and Services Tax earlier this year.
“Demonetisation…not many people take note of the fact that there’s been a total obliteration of fake currency. These are the gains that are often not realised”, he said.
Below is a collation of Finance Minister Jaitley’s responses to questions at the FICCI forum:
“India is among the more liberal and open economies…”
“I do hope that this year the environment is going to be a lot more positive. There is a more positive mood around the world. Obviously if the world moves on, consequential impact on the Indian economy would follow. The opportunity is wide. We are among the more liberal and open economies in the world. Not only that, we have also made procedures very simple. But open doors are not enough. They (investors) must feel India is a more comfortable place to do business in.
“We’ve cut short most procedures”
Each state wants investment to come to their state. They want the time lag between the decision of investing and the actual investment to be cut short. Participation of states augurs well. Second of course, we’ve cut short most of our procedures. Wherever required, clearances are expeditious. Environmental clearances, though, need to come to the Centre. We know that land and building laws have to be improved. State level, they have started putting their house in order. Pople have realised that India is far cleaner place to do business now.
“Some reforms are low hanging fruit but we assaulted the shadow economy”
We have great human resource in India and the ability of India to reform. There are some reforms that are low hanging fruit which are achievable via policy push. But there are some that are very challenging - to assault the shadow economy and to integrate the formal with the informal, to expand India into a cleaner economy. The IBC has changed the whole dynamics of credit debtor relationships. If demonetisation changed how India spends its money, IBC has changed the relationship between creditor and debtor. Borrowers have to indulge in far more ethical practices. The consequence of pushing a company into debt is something any owner will try to avoid now.”
"I had already announced corporate tax would come down. The GST experience has shown that the centre and states are willing for a big plunge. Even when political parties indulge in pin pricking on GST, the consensus was not affected because state governments knew that this was in their benefit."
On the US and India
“Met the US Treasury and Commerce secretaries and they indicated that we must get back to governmental participation in investor conferences. In India for instance - the aviation sector is expanding. I see huge expansion. America is but a natural partner. We want partnership in defence for setting up manufacturing in India.”
“Two new labour codes are coming soon”
“Immediately, there’s no problem to the reform process. Land - we’ve allowed state governments to make whatever change they want. There is plenty of government land available in the states. If states want anything more, it’s a Concurrent list matter, they can bring it up to us. Labour law issue is overstated. Age of strikes is long over. They want to protect their service conditions. When we reformed the aviation sector, there were strong unions but the reforms went ahead. Two new labour codes will be coming out. One is already cleared for parliamentary approval.”
Revenue and deficit target
Broad approach of the govt has been very clear last three years. We’ve stuck to our fiscal deficit targets. Direct tax figures have just been released and we are on target. On GST - it’s too early to discover a pattern. In the next 3 months, the trend will become a little more clear. Transient impact cannot be construed as a long term challenge.
Published Date: Oct 13, 2017 09:16 am | Updated Date: Oct 13, 2017 09:16 am