GDP Growth Of 7-8% Reasonable In Current Global Scenario, Arun Jaitley Says
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Finance Minister Arun Jaitley on Thursday backed the GDP numbers for the last fiscal, saying a 7-8 percent growth is “fairly reasonable” in the current global backdrop.
There are several factors that contribute to GDP in a particular quarter, and some slowdown was visible globally before demonetisation took place, he told reporters in New Delhi on the sluggish growth in the January-March quarter.
"...There is also the impact on various sectors, the 9-10 percent growth normally [seen] in services and financial sectors had come down,” Jaitley said at an event to announce achievements of his ministries (finance and defence) in the three years of the Bhartiya Janata Party-led government.
The GDP data released on Wednesday showed that growth slipped to 6.1 percent in the last quarter of financial year 2016-17, while the economy grew 7.1 percent during the full year.
Also Read: Growth Slowdown Challenges India's Hawkish Central Bank
NPA Resolution Work In Progress
He said the the resolution of staggering levels of bad loans is work in progress and some action will be taken within next few days under the recently passed NPA (non-performing assets) ordinance. With the ordinance, the government empowered the Reserve Bank of India to ask banks to initiate insolvency proceedings to recover bad loans and promised more measures to resolve the NPA crisis.
Mounting bad loans also affect the capacity of the banking system to support growth, he said.
Linked to it is the challenge of wanting to increase private sector investment, even though our FDI and public investments have significantly increased.Arun Jaitley, Finance Minister
GST To Add To Country's Growth
Jaitley said the Goods and Services Tax (GST) will only add to India's growth, and the Centre is prepared to roll out GST by July 1.
On some states such as West Bengal seeking a delay in rolling out GST, the finance minister said: “Decisions are all taken by consensus and so far, we have succeeded in maintaining that consensus... at the Srinagar GST Council Meet, ministers from almost every state who spoke to me were absolutely clear about maintaining the July 1 date and we are in a state of preparedness for July 1.”
Chief Economic Adviser Arvind Subramanian, who was also present at the event, said the rollout of the new indirect tax regime will both reduce inflation and increase consumption as prices of commodities are expected to fall.
Incidence of tax is going to come down, so it will both reduce prices and increase consumption...we expect implementation challenges to GST, but the economic effects of tax structure will be positive for both reduce inflation and increase consumption.Arvind Subramanian, Chief Economic Adviser
Also Read: There Are 160 Reasons India Won't Escape Sales Tax Chaos
When asked about reconsidering individual rates such as those on hybrid cars, he said the GST Council looks at each item and try to accommodate requests as they deem fit.
You have a mechanism in the GST Council...The GST Council takes the final decision...Using media propaganda for getting the rates varied will not make any significant impact on the decisions of the Council--on reviewing hybrid cars' rate.Arun Jaitley, Finance Minister
Tax Amnesty Scheme Fails To Get Good Response
Pradhan Mantri Garib Kalyan Yojana (PMGKY), the tax amnesty scheme introduced post the government's demonetisation move, failed to get a good response as the tax rate was considered too high, Revenue Secretary Hasmukh Adhia said at the event.
The scheme received income declarations worth Rs 5,000 crore, he said. Given the 50 percent tax rate under the scheme, the government will receive Rs 2,500 crore in tax collections. The remaining 25 percent of the income declared would be locked in for a period of four years.
“The response has not been so good...There are mainly two factors for it. One, even before the scheme was announced, people had tried to put their cash into different accounts, second was the rate,” said Adhia.
However, Jaitley said that PMGKY was not an isolated scheme in the previous financial year. The total disclosures should be looked at taking under consideration all tax amnesty schemes of the government.
Air India Divestment
The government has expressed interest in privatising the national carrier Air India Ltd. Jaitley, who on earlier occasions has mentioned that he is not in favour of the government running an airline, said that the NITI Aayog has already made its recommendations to the civil aviation ministry and now the ministry will explore all options.
Farm Loan Waiver
The Centre is not going to fund any farm loan waivers announced by individual state governments, said the Union Finance Minister. The Finance Commission which is entrusted with the job of deciding the quantum of funds received by states from the central government, recommends the amount and the Union government will adhere to it, he added.
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