India has buried the “ghost” of GAAR, Finance Minister P. Chidambaram said on Tuesday asserting that there is no threat of a rating downgrade in view of key economic decisions like allowing FDI in multi-brand retail and hiking fuel prices.
He said there is revival of investor interest in India as a result of a number of measures taken by the government since September 2012.
Mr. Chidambaram was also hopeful that fiscal deficit will be contained within the targeted 5.3 per cent of the GDP this fiscal and trimmed to 4.8 per cent in the next. Growth is likely to climb to 6-7 per cent from 5.7 per cent expected in the current year, he said.
“There is universal acknowledgement that we have handled the GAAR situation fairly effectively and buried the ghost that GAAR will be some kind of a monster,” he told PTI in an interview.
Here on a day’s visit for an investor conference, the Finance Minister said as expected investors raised issues relating to the controversial provision of GAAR that was introduced in the 2012-13 Budget by his predecessor.
The General Anti-Avoidance Rules (GAAR) gave unbridled powers to taxmen to check evasion of taxes by foreign investors that created huge apprehensions among investors.
Last week, Mr. Chidambaram announced that GAAR implementation has been postponed by two years to 2016.
“On specific questions on GAAR and I took some time in explaining all the measures we have made to GAAR and told them how market has received it very well here. There is universal acknowledgement that we have handled the GAAR situation fairly effectively and buried the ghost that GAAR will be some kind of a monster,” he said.
Kicking off his campaign to woo investment, Mr. Chidambaram met over 200 top investors at the “India for Investment Conference” organised by the Citibank and BNP Paribas.
He made a strong case for their investment assuring that all their concerns were being addressed and that the government has taken all measures including to contain fiscal deficit.
“It is a very well attended meeting. Virtually everybody who is anybody in the financial sector was here including wealth funds, sovereign funds, banks asset management companies. It gave me an opportunity to explain the economic situation in India, the steps we are taking to put the economy on high growth path,” he said.
Mr. Chidambaram, who will be in Singapore on Wednesday on a similar mission, said India continues to post growth even now.
“We are undeniably growing faster,” he said pointing that out only China and Indonesia are ahead of India.
“But this growth is not sufficient for us. We need to accelerate it. So I told them steps we are taking to accelerate growth,” he said.
He said the first step in that direction is fiscal consolidation and commitment to the path of fiscal prudence.
“At that at the end of this year, we will achieve the target of 5.3 percent of fiscal deficit and next year I will budget for fiscal deficit no more than 4.8 percent,” he said.
He said he has also explained to the international investors the number of measures taken in this regard.
“I thought it was a fruitful conference. I could get a sense of the concerns of investors. Happily many of the concerns were addressed in the last three of four months,” he said.