Jaitley plans to act on GST, land acquisition and insurance bill

Dated 10th November, 2014

Finance Minister Arun Jaitley said on Sunday the government would push amendments to the Land Acquisition Act even if opposition parties did not support it. He said changes to remove obstacles in this law were necessary to develop smart cities.

“We will first try to reach a consensus and if that is not possible, we will go ahead and take the decision,” he said at the India Global Forum summit here.

Many state governments have already said the Act, passed last year, hinders the process of acquiring for infrastructure projects. The rural development ministry has already suggested a number of amendments to dilute provisions such as mandatory consent from at least 70 per cent of those affected locals for acquiring land for public-private partnership projects and at least 80 per cent for private projects.

Also, dilution of a key clause on social impact assessment, criticised by states as too time-consuming for industrialisation.

In his maiden Budget, Jaitley had proposed an allocation of Rs 7,060 crore for FY15 for developing 100 ‘smart cities’ in the country.

At the Sunday meet, Jaitley also reiterated his belief that the long-pending Insurance Laws Amendment Bill, which seeks to raise the foreign direct investment cap in the sector to 49 per cent (from the present 26 per cent), will get Parliament approval in the coming winter Session.

The reform, experts believe, could increase the flow of foreign investment to Rs 25,000 crore into private insurance companies. There are about two dozen such entities, both in the life and non-life segments.

Jaitley also said the Centre was in final stages of talks with states on a national goods and services tax (GST) on amendments to the proposed GST Bill.

“I do hope that my friends in the opposition parties, particularly the principal opposition, after a wasted opportunity when they were in government, spend a more fruitful tenure when they are in opposition,” he said.

The proposed GST regime aims at subsuming most indirect taxes at the central and state levels. The earlier government had in 2011 introduced a Constitution Amendment Bill in the Lok Sabha to pave the way for introduction of GST. Its rollout has missed several deadlines because of lack of consensus over certain key issues. States have proposed to keep petroleum, tobacco and alcohol out of the GST ambit and had demanded the exemption list be included in the Constitutional Bill.

Clearance of Central Sales Tax compensation arrears (of Rs 13,000 crore since 2010) has been another area of contention between Centre and states. The latter have also sought a five-year compensation mechanism and demanded these be included in the Constitutional amendments.

Jaitley also promised a rational, non ultra-aggressive tax policy and making India a global and low-cost manufacturing hub. He also said the government’s disinvestment programme would “unfold” in the next couple of days. He added the aim was to bring down state equity in public sector banks to 52 per cent.

“The economy was and is in a challenging situation and a principal challenge is to restore the confidence in (it), to expand economic activity and move towards increasing the growth rate,” he said. “We expect the economy to grow reasonably, I would say modestly, this year. We expect to grow a little better next year and hopefully if this trend does continue, India can be on a high growth trajectory.”

Jaitley, who held additional charge of the defence ministry, said a priority of the government was to maintain good relations with neighbouring countries and also peace within India.

“Yes, there should be a dialogue. We will welcome it but the environment for dialogue has to be created by both countries. One of them cannot upset the environment and then ask why dialogue is not taking place,” he said.

He also said the army, navy, air force and coast guard combined needed to acquire 440 helicopters and most of them would be bought from Indian companies, including state-run Hindustan Aeronatics, to enhance capacity building.

(This article is published on 10th Nov, 2014 in The Business Standard)