Jaitley satisfied with progress in GST implementation and tax reform

Dated 5th November, 2015

Finance minister Arun Jaitley has said that he was satisfied with the progress made in implementing taxation reforms both direct and indirect. He was speaking at the National Strategy Day on India, jointly organised by the World Economic Forum and Confederation of Indian Industry here on Wednesday. He appeared hopeful on GST (goods and services tax) becoming a reality soon.

The one-on-one session on Delivering Growth in the New Context was moderated by Klaus Schwab, founder and executive chairman, World Economic Forum.

Jaitley said that an announcement can soon be expected on the roadmap for direct taxes while on indirect taxes, the implementation of GST is only a matter of time. He assured the audience that the large number of legacy issues on taxation that he had inherited have largely been sorted out.

“On GST, the supporting legislation and the IT backbone are ready and there is little conceptual opposition to the idea,” he said. He said that the popular constituency that supported change, reform and growth was now much larger than before.

Responding to a question on ways to revive private sector investment, he said that in the current situation public investment had to lead the way. Considerable amount of resources have been devoted to step up public investment not only by the government but also by public sector enterprises and he was confident that the private sector would soon start participating in the investment cycle. The government, he said, was making resources available to sectors such as highways and railways where expansion would have a positive impact on the rest of the economy.

He highlighted that substantial budgetary resources are now available due to the drop in global oil prices and the strong growth in indirect tax collection. The subsidy reform implemented by the government, he suggested, is the biggest unsung reform of this government that has enabled resources to be devoted to more productive uses. In addition, resources for investment in infrastructure were being made available by international and domestic insurance and pension funds.

The government is also making an effort to revive the legal framework for public-private partnerships which, he said, needs to be radically changed. Contracts are being reworked and the time period for arbitration is being brought down. The one problem area within infrastructure, he said, is the power sector where state distribution companies have become unviable and are unable to lift power from the generating companies. He said that a framework is being developed for resolving this issue which will be announced in the next few days.
 
Speaking on the challenge of creating employment opportunities for the large number of people entering the workforce every year, he said that the focus would be on supporting low-cost entrepreneurship. The Mudra scheme is enabling bank lending at a soft rate to a large number of such entrepreneurs in the unorganised sector.