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Business News/ Politics / Policy/  Make in India week: Arun Jaitley hints at banking reforms
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Make in India week: Arun Jaitley hints at banking reforms

The finance minister says he will bring down corporate tax to make direct taxes globally competitive

Finance minister Arun Jaitley at the CNN Asia Business Forum on Sunday in Mumbai. Photo: Abhijit Bhatlekar/MintPremium
Finance minister Arun Jaitley at the CNN Asia Business Forum on Sunday in Mumbai. Photo: Abhijit Bhatlekar/Mint

Mumbai: Union finance minister Arun Jaitley on Sunday said the government will soon announce several banking sector reforms but gave no details of the plans.

“We will be announcing a series of banking reforms in the days to come," Jaitley said at the CNN Asia Business Forum 2016 at the Make In India Week.

The finance minister did not disclose details of the proposed reforms as he is set to announce his third Union budget on 29 February.

Jaitley said that the government has already announced its intention to pare its holding in state-run banks to 50-51%. The government will, however, remain in the banking business as the institutions are critical to extending services to underserved areas.

“Digital technology should be used to remove income inequality. When the government came to power, only 58% of Indians were connected to banks," Jaitley said, adding that public sector banks and their boards have to be professionalized.

Jaitley praised former prime minister Manmohan Singh for initiating economic reforms when he was finance minister. “To be fair to him, he had started reforms and did a great job," Jaitley said, adding that the process stalled when Singh became the prime minister.

On Saturday, Jaitley criticized Singh for stating in an interview that the Narendra Modi government was not reaching out to the opposition or doing enough to strengthen India’s economy.

In a Facebook post, Jaitley said the transition from the previous United Progressive Alliance to the current National Democratic Front (NDA) was a passage from “policy paralysis" to a “global bright spot".

He said the Congress’s stand on the Goods and Services Tax Bill has been motivated by “real politics". Jaitley further alleged that unlike in the UPA regime, when policies were framed at the Congress headquarters, now Prime Minister Narendra Modi has the last word.

On Sunday, Jaitley said he is conscious of the fact that India’s tax regime has to be stable and predictable and will aim to make corporate tax rates globally competitive.

On Sunday, Prime Minister Narendra Modi rejected opposition criticism over the state of the economy, saying as the world was grappled with financial crisis, India alone was “progressing at a rapid pace" because of the policies of his government.

“Everyone is saying this...the World Bank, the International Monetary Fund. The world is going through an economic crisis, but it is India alone that is progressing at a rapid pace. This is a unique situation when the whole world is slipping and India is growing," Modi said.

“People across the world are saying that the steps taken by the government have led to India becoming the fastest growing economy among larger economies of the world," he added. He was speaking at an event to celebrate the birth anniversary of Swami Dayanand Saraswati, the founder of the social reform movement Arya Samaj.

The prime minister’s assertion came on a day when the Congress said it would demand a white paper on the state of the economy in the budget session of Parliament beginning 23 February. Former Union minister and Congress deputy leader in the Rajya Sabha, Anand Sharma, told Press Trust of India that his party will demand a white paper on the economy in view of the “boastful claims" of the prime minister.

The Make In India week ends on 18 February. The initiative, launched by the prime minister in September 2014, is the government’s flagship programme to encourage international companies to manufacture in India.

Jaitley said unreasonable tax demands fail to generate more revenue. “In a federal system, it is difficult to get states to surrender taxation power. As far as indirect tax regime is concerned, GST is the big tool; it will bring reforms in the way we do business. Even if India’s GST model is watered down, we have to start somewhere," he added.

Anand Mahindra, chairman at Mahindra Group, said, “Make in India is not a mandate but a rallying cry and the government is trying to draw attention of investors. All the government needs to do is put in regulation and institutions, and then leave the rest to business."

Kumar Mangalam Birla, chairman of Aditya Birla Group, said the government wants to be a catalyst through its Make in India initiatives, and several new opportunities have opened up for the private sector in India, which cannot be ignored.

However, some said the government needs to do more to facilitate business.

“Make In India in the technology sector is very important and long overdue. For this initiative to succeed will require a sea change in the governance of India," said Devesh Agarwal who developed India’s first industrial hand-held computer. “The difficulties of doing business in India are demonstrated by the fact that almost all tech sector start-ups are just service related with negligible physical products," said Agarwal, who won a silver medal at the Lockheed Martin innovation awards.

Agarwal said the cost and time involved in jumping through the hoops for importing duty-free components discourage product design and development in the country. “The prime minister needs to appoint a specific minister for Make in India, whose mission will be to remove all these obstacles to ensure success of this initiative," said Agarwal, who exports electronics products.

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Published: 14 Feb 2016, 12:29 PM IST
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