Pinning hopes on a slew of government reforms, Economic Affairs Secretary Shaktikanta Das on Tuesday said the GDP growth will be around 8 per cent this fiscal while the agriculture sector is expected to grow over 4 per cent.
“The GST will happen, bankruptcy law has happened. Both these pieces of legislation together with amendments to the arbitration law, DRT, company laws have potential to create a very vibrant and dynamic economy,” he said.
“We have an economy which has recorded 7.6 per cent growth, thanks to good agriculture where the growth we expect to be upwards of 4 per cent definitely. It could be even 4.5 per cent... We are looking at growth upwards of 7.6 per cent and hopefully close to 8 per cent,” he said at an Assocham event here.
In 2015-16, the country’s economy grew 7.6 per cent and the Economic Survey in February had projected a growth rate of 7-7.75 per cent for the current fiscal while RBI had forecast 7.6 per cent. Das further said the bankruptcy law does not address the problem of financial failure of banks, insurance and other financial firms, he said.
So, a draft Financial Resolution and Deposit Insurance (FRDI) Bill, which proposes to set up a resolution corporation, has been circulated, he said. “It’s our endeavour to introduce the Bill as early as possible in Parliament. We are trying to introduce it in the Winter Session,” he said.
Finance Minister Arun Jaitley, in his 2016-17 budget speech, said a comprehensive code on resolution of insolvency cases in financial firms will be introduced as a bill in Parliament this fiscal.
“A systemic vacuum exists with regard to bankruptcy situations in financial firms. This code will provide a specialised resolution mechanism to deal with bankruptcy situations in banks, insurance firms and financial sector entities. This code, together with the Insolvency and Bankruptcy Code 2015, when enacted, will provide a comprehensive resolution mechanism for our economy,” he had said. Following the announcement, on March 15, the ministry set up a panel under additional secretary Ajay Tyagi to draft the bill which was later submitted.
Meanwhile, Das expressed hope that the Bankruptcy and Insolvency law would become operational by the end of this year, leading to further ease of doing business.
“We have a definite roadmap to implement the Bankruptcy law. The Ministry of Corporate Affairs is working on it. The law ministry, the legislative department are also working on finalising the regulation. We expect therefore the entire bankruptcy and insolvency law will become operational by end of December,” he said at an Assocham event here.
‘Revenue-neutral rate structure of GST to be finalised next month’
Asserting that the government is determined to implement GST from the next fiscal, Economic Affairs Secretary Shaktikanta Das on Tuesday expressed confidence that the revenue neutral rate structure will be decided the next month. “The rate structure on which there is a lot of discussion going on at the moment with the GST Council and also in the public domain... will get resolved in the next meeting of GST Council in the first week of November. Maybe, one or two sittings, it should come to a conclusion,” Das said at an Assocham event here.
Dismissing criticisms, he said the rate structure has been prepared based on “a very practical basis”. “The rate has to be necessarily revenue neutral. You cannot have a rate structure where governments run into huge deficit... Therefore, GST rates are worked out in such a manner that bulk of commodities are under the standard rate, which is 18 per cent,” he said.
The items which are very important, which are of use to a large cross-section of people and common man are pegged at 6 per cent, he said, adding that 6 per cent, 12 per cent, 18 per cent and a higher rate for demerit goods has been proposed. Former finance minister P Chidambaram on Monday criticised the proposed multiple-rate GST structure as “disastrous”.
“We sincerely hope that we do not misinterpret the design of standard, standard minus and plus rates of GST. We can have 20 rates. It will be disastrous and that cannot be GST, it will be fooling the country,” Chidambaram had said. Emphasising that the bankruptcy law together with GST will bring in a lot of dynamism into Indian economy, Das said the government is determined to implement GST from April 1, 2017.