The economy is recovering, we are in a positive zone: Jaitley

As revenues increase, I would like to earmark expenditure for rural infrastructure and strengthening of social sector schemes

Union Finance Minister Arun Jaitley defended the pace of reforms set by the Modi government, which will soon complete its first year. File photo

In an interview with Puja Mehra following the conclusion of the Budget Session of Parliament, Union Finance Minister Arun Jaitley defended the pace of reforms set by the Modi government, which will soon complete its first year. Edited excerpts:

What are your priorities for the second year of the government?

The announcements in the Budget — some of which will need legislative action, while many can be implemented through executive approvals. The direction provided in the Budget will be in which we will move. Additionally, as revenues increase in future, I would like to earmark expenditure for rural infrastructure, including irrigation. And strengthening of social sector schemes as they are receiving a good response.

Have foreign investments picked up?

In 2014-15, the Foreign Investment Promotion Board received 350 proposals, of which 241 have been cleared in 11 meetings. That works out to a rate of one proposal a day. Overall, foreign direct investment into the country jumped 40 per cent during 2014-15 over the previous year’s to Rs. 1,76,000 crore.

What is your assessment of the economy?

The economy is recovering. Inflation is under control, the fiscal deficit and the external current account deficit are under control, most laws pertaining to management of the economy are getting passed; so the direction we are moving in seems to be positive. From the despondency that the country was in, we have now moved into a positive zone. Most legacy issues are now over barring some carried-over effect of taxation issues. Growth in manufacturing is important for faster than 8 per cent growth and in which the push to infrastructure in my Budget will help. We are waiting for June 1 [the southwest monsoon].

What is your response to the apprehensions being expressed about the potential for harassment by the taxman under the new law for black money held overseas?

Most people do not have illegal money or assets abroad. So it is a giveaway when apprehensions are expressed. The one-time compliance scheme in the Bill is a fairly reasonable one for those who have assets and accounts overseas. It is a taxation scheme where compliance time is given to you. Those who have no accounts and assets overseas have nothing to fear. Now, there is a third category which has illegal assets abroad and which does not want to comply with it. Now they certainly have a lot to worry. If you don’t use this compliance window now, time will run out because by 2017, real-time automatic disclosure of information will take place. The government will notify the compliance window in the next two-three weeks for those holding undeclared assets abroad to come clean by paying a 30 per cent tax and a 30 per cent penalty.

In which companies are you planning strategic disinvestment?

When I say strategic, there are some on which there is no difficulty in even strategic sales. I think the Ministry of Tourism may take some initiatives by itself. I do not know what is the appropriate time the Department [of Disinvestment] will decide, but the enabling permissions have been granted. Now it is for the department to choose the right time.

Why couldn’t you push the Constitution Amendment Bill for the Goods and Service Tax (GST), a major reform, through Parliament in the just-concluded session?

Despite resistance from the principal Opposition party, the good news is that in substance, all political parties supported the GST. The Congress walked out in the Lok Sabha on the demand for re-referring the Bill to a standing committee, which most parties didn’t support and the quorum in the Lok Sabha was also unaffected — there were 354 votes for the Bill against 272 required for a Constitution amendment. In the Rajya Sabha, the Congress’s motion would have been defeated as it will need 50 per cent of the votes; so they fell back upon their Plan B, which is to disturb the house on a non-issue.

In the Rajya Sabha, no political party would have given support to the principal Opposition party, except for the AIADMK, which is in power in Tamil Nadu, where it has some issues, though it has not raised these in the meetings of the Empowered Committee of State Finance Ministers. Therefore, the government agreed to the demand to refer the Bill to a select committee.