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FM sings reform tunes, pledges policy stability

A ‘whole set of second generation reforms’ will be unveiled in the next Union Budget, Finance Minister Arun Jaitely said on Sunday, promising ‘a lot of exciting times ahead.’

The country needs ‘a larger opening out in more sectors,’ it requires stability of policy and tax regime besides a ‘reasonable’ cost of capital, he said, during his interaction with journalists at the PTI headquarters in the Capital. Asked what are the sectors the government was targeting, he said his immediate target was insurance amendment bill, coal ordinance and the GST bill.

Looking ahead, the Minister envisages the GDP growth to cross 6 per cent in 2015-16 once the effect of all the steps proposed kicks in. From thereon, ‘We are going to take off,’ he said. Asked about the broad contours of the direction the Budget for 2015-16 will take, Jaitley said, ‘There is a whole set of second generation reforms. And there is a whole set of reforms which have arisen because some undoing is required. The coal ordinance is one such thing. Allocation of natural resources by non-discretion is another.  A rational and reasonable tax regime is another. Some procedure changes in the land (acquisition) law needs some undoing.’

Enumerating the steps taken by the NDA government, he said that a series of measures taken in the last six months had ‘corrected the (depressing) sentiment.’ Answering a question about the state of the economy that he had inherited, Jaitley said the economy had ‘dipped quite low and there was a sense of disillusion’ but in the past six months domestic as well as global investors were taking a huge interest although their faith in the Indian economy had been shaken badly.

‘It will still take some time before results start surfacing. On the ground some green shoots are visible,’ the Minister said. ‘I think we have a lot of exciting time ahead of us and I do see investments coming into India. I do see domestic investors taking a lot of interest,’ he emphasised.

However, he acknowledged that several more steps are required to create even more positive environment not only by the Central government but also by the state governments and several other institutions, which include the Opposition parties in Parliament. Asked about the steps he intended to take, the Finance Minister replied: ‘You see you need a larger opening out which is what we are doing. There I think we are on track. One by one more sectors (will be opened up), there are avenues.’

‘You will require to give another comfort to investors. You have given them the comfort of stability of politics but (they require) stability of policy, stability of tax regime (and) correcting whatever major aberrations have taken place,’ he said. Jaitley said infusing liquidity into various sectors was necessary along with providing reasonable cost of capital.

Jaitley said if the government was not able to infuse that liquidity or unable to provide cheaper capital, then opening out alone would not help. He pitched for an interest rate cut by RBI at its next monetary policy review due next week. On the importance of his next Budget, the Finance Minister said the Budget is really an accounting statement.

‘Reforms have to take place all 365 days in a year. But then Budget is an important occasion to highlight that. Therefore it is important in those terms. It is also an important occasion to signal the direction.’
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