New Delhi,Praveena Sharma: It was sort of stock-taking of the Modi government's one-year economic performance, and finance minister Arun Jaitley, while addressing the press on Friday, was emphatic that reforms and decisions on pending policies would continue at a swift pace despite obstacles and opposition, by melding good governance with clever politics. Here, Praveena Sharma compiles his views on various economic issues.
In the previous government's fiscal deficit figure, there was always a hidden fiscal deficit. Today, we have not only beaten our fiscal deficit target of 4.1% of the GDP (at 4%), but we also believe both its management and quality are equally important.
In corporate tax, discretions should be removed. So, we will be phasing out exemptions and bring the effective rate down to global levels. It will not only promote investment but place surplus money in the pockets of investor to be ploughed back into the business. High taxation rates are never investor- or economy-friendly. As far as the individual tax payer is concerned, we have given exemption so that he has more money in his pocket to spend and save more. We are trying to put a non-adversary tax regime in place. I am happy there are no disputes in terms of taxes. Those disputes that exist are legacy matter and they will be slowly resolved. We are moving in that direction.
Public debt management agency (PDMA), income-tax returns (ITR) form and minimum alternate tax (MAT)
We are very clear that ITR form has to be simple. I was outside the country when I came to know of the 3-4 additions in the ITR forms. Even a twelve-and-a-half-page form is not acceptable to me. Simplifying tax is a good thing. PDMA should be set up and its roadmap will decided through consultation between the government and the RBI. We have started work in that direction. MAT is a legacy issue and our efforts to resolve it is on.
Goods and services tax by April 1, 2016
As far as the government is concerned, we are endeavouring to getting the legislation passed and keeping information technology (IT) network required for implementing it from April 1, 2016 ready. I am conscious of the fact that the reference to the select committee makes it cutting it too fine to reach the deadline but the government is going to make every effort to ensure that there is no delay and that we meet the deadline. We will be in readiness (by April 1, 2016)
Foreign direct investment
The overall number of proposals that came up before foreign investment promotion board (FIPB) and through automatic route were up 40% in 2015 compared with the previous years.
Scrapping FDI in multi-brand retail
My party's views on this matter is known to everybody. But the policy (on FDI in multi-brand retail) formulated by the previous government will continue, that is the official position of the government. The sector, itself, is undergoing significant change. Therefore, this debate will have to be ultimately analysed in terms of the change it is undergoing. In this sector, the largest retailers in the world do not have a retail store. We have to pause for some time and see how the impact of technology on the sector itself plays out in the next few years.
Secondary divestment has already got umpteen proposals of over Rs 50,000 crore. The overall target of disinvestment is more than Rs 69,000 crore for this year.
Land acquisition bill
The numbers will decide whether it (land acquisition bill) is passed (in the Rajya Sabha) or not. I think the numbers are very clear.
Negative exports growth
I have always believed it (value of rupee) must be market driven. It will find its own level and reflect its real strength. There are two overwhelming factors affecting exports growth. First, fall in oil prices, which brings down you imports because we import a lot of oil. There are also a lot of oil products exported from our refinery, which is 18% of our oil basket. So, when oil prices go down, they impact both. Secondly, the global slowdown has direct impact on growth of our economy but that is not to say that I am in a way justifying the fall. I am only trying to understand the reasons. Once global economy picks up, domestic economy (will also) pick up.
Interest rate cut by RBI
It is (time to cut rate by central government with easing inflation)
Stubbornly high non-performing asset (NPA) ratio
I would take it as an initial indicator (drop in NPA to 5.2% from 5.6%) because at times indicators can be patchy. I am not going to make a final conclusion on this right now. If this pattern continues over 2-3 more quarters then I will draw a conclusion that there is a pattern here. So, I am keeping my fingers crossed. If there is a turnaround in banking sector, then turnaround in economy has to take place. We need recapitalisation fast.
Pro-corporate government accusation
This government is pro-growth and pro-development. Our social security programmes are going to be strongest in the country. Our policy will be one of arms-length-distance in terms of policy decision for individual business houses.