New Delhi: The PM Narendra Modi-led National Democratic Alliance government will follow the path of fiscal prudence and implement policies that will lead to lower tax rates, finance minister Arun Jaitley said, indicating businesses and investors can expect continuity in economic policies if the ruling alliance is re-elected.
“I’m quite clear in my mind... at least we had a lot of good fiscal prudence and we brought the rates down... if we are in power we will continue the same glide path," Jaitley said at a Confederation of Indian Industry event on Thursday.
Uncertainty about the outcome of the 2019 Lok Sabha elections that start on 11 April has fuelled concerns over policy continuity and economic growth. Modi, who swept to power in 2014 promising economic prosperity and millions of jobs, is seeking a second term in office. The election results will be announced on 23 May.
“The focus has to be on growth. An average growth rate of 7% is good but we are operating below our potential. In order to maintain similar or higher growth, we need structural reforms in agriculture and policies should be formulated in a way such that services sector gets more stimulation," said D.K. Srivastava, chief policy adviser at consulting firm E&Y.
In his comments, Jaitley referred to the rate cuts since the goods and services tax (GST) was implemented on 1 July 2017. Since then, GST rates on several items of common use have been reduced to lower tax slabs of 5%, 12% and 18% from 28%, barring cement and some other items. It is now only a matter of time before the GST rate on cement is also reduced, Jaitley said.
If the current government comes to power again, it will be able to maintain economic growth rates similar to what the country has seen in the past five years, Jaitley said.
“If we did that, we will probably be depleting poverty to negligible levels, becoming a reasonable mid-income nation, our GDP will multiply several times," he said.
In the next five years, the middle class and neo-middle class would be India’s largest voter component and this would diminish the relevance of issues that were considered crucial three-four decades ago, Jaitley said. “If that’s the trend, the quality of public discourse and policies will have to be completely different. Governments, politicians, ministers, leaders, manifestos will be tested and judged by much harsher standards," he said.
Calling the debate over electoral bonds—a tool to donate funds to political parties—“ill informed", Jaitley said the system is “reasonably transparent".
“The only non-transparent factor is that how you distribute it (bond) is known to you as a donor," Jaitley said.
The finance minister’s comments come a day after the Supreme Court said it would hear petitions challenging the government’s electoral bonds scheme on 5 April. Last month, the Election Commission told the apex court that rules related to political funding could have serious repercussions on transparency.