Expressing confidence and optimism on the state of the economy, Union Finance Minister Arun Jaitley said with the long-term impact of all the initiatives taken by the Modi government setting in, in the coming quarters growth could be higher than the 5.7 per cent at which the economy expanded during April-June.
Mr. Jaitley attributed the improved sentiment to the Modi Government’s clarity in policy direction and its speedy decision-making in its >first 100 days and highlighted the reforms and policy measures it was planning to roll out in the coming weeks.
Early roll out of the Goods and Services Tax (GST) is at the top of the Government’s agenda, he said, adding that he also planned to take up with major political parties the enlargement of the exemptions under the Land Acquisition Act.
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Addressing reporters here on the steps the Modi Government had taken during its first 100 days, the Finance Minister said though at the time of presenting the Budget he had accepted the challenge of a “daunting” fiscal deficit target of 4.1 per cent of the GDP, it now seemed achievable and his confidence in it was greater.
In response to a question on the scope for interest rates to be lowered for spurring investments in the economy, he sent out an unambiguous signal to the Reserve Bank of India (RBI). He said he hoped the RBI would cut them very soon and then added that left to himself, he would reduce them “now.”
He said he expected the Insurance Bill that was referred to a Parliament select committee earlier this month to be passed in the next session. On the ambitious disinvestment target the Government had set, he said the plan would begin to roll in in a few days.
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Mr. Jaitley said there was a sea change in the investment sentiment today. Even international investors were looking at India with curiosity and the impact of this would become visible over the next few quarters.
Detailing the impact of the Modi Government’s steps for improving the ease of doing business on the economy, Mr. Jaitley said: “We took important decisions to open sectors where Indian corporates will endeavour to, obviously in joint venture with foreign partners, start manufacturing in new areas.” “That is the thrust and the long term impact of all these decisions will be gradually felt.”
The manufacturing curve has turned, services were looking up and 5.7 per cent growth was encouraging, he said.
When the new Government came to power around three months ago, he said, it was against the backdrop of the economy facing significant challenges as growth had considerably slowed down and there was loss of investor confidence in India.
“The principle priorities I’d outlined at that stage were containing inflation, restarting the growth cycle, rebuilding the investment cycle and keeping the fiscal deficit at acceptable levels,” Mr. Jaitley said, adding that the election result itself was a mood changer.
Mr. Jaitley said he had already met and discussed the outstanding concerns of states on the GST with Chief Ministers and Finance Ministers of West Bengal and Gujarat. “The states want certain items exempted from the GST but we are engaging with them as keeping too many items out will defeat the whole purpose,” he said.
The Finance Minister said the main investor grievances such as those on retrospective taxes have been addressed already in the Budget.
While foreign direct investment (FDI) limits in the defence and railways sectors have already been eased, Mr. Jaitley expressed the hope that the Government would be able to open up further the insurance and construction industries as well.