The infrastructure and rural sectors will be the focus areas in the next Union Budget, which will be unveiled on February 1, Finance Minister Arun Jaitley said on Thursday. Speaking at an event in the national capital, Jaitley said the government would “concentrate on additional spending” in the two areas.
In another event, he said improved macroeconomic fundamentals had placed India on the growth trajectory of 7-8 per cent and the country would have to invest heavily in infrastructure over the next two decades to graduate into a middle-income economy.
On the issue of privatisation of public sector banks (PSBs), he said political acceptability of such a reform had to be there. “For any reform to take place, the political acceptability of that reform has to be there. And though I would be in favour of a large number of reforms, I am pragmatic enough to realise that the political opinion in India is still not ready to take that decision,” he said.
The government had last month announced a Rs 2.11-lakh crore capital infusion into PSBs to be spread over two years. High non-performing assets have taken a toll on the profitability of public lenders. “... it is important that you strengthen these banks, even if it means putting in money. You then merge and create bigger banks, more viable banks, and probably allow them space to operate professionally,” he added.
On insolvency process
The finance minister said there was no blanket ban on promoters from bidding for delinquent companies, which were being sold to recover the dues of banks. Only those who had not serviced their loan accounts by not even paying the interest on loans had been debarred, he added.
Jaitley said although certain countries had insolvency laws wherein defaulting promoters were allowed to bid for their own company, the political process in India would not have accepted a situation wherein banks take a substantial haircut only to have the same promoters back.
“The IBC process will go on and we have not debarred them completely. There is no blanket bar. All it says is that if you have a non-performing account on the day of bid, please make it a performing account. Standardise your account,” he said.
Jaitley hinted at merging the 12 per cent and 18 per cent tax rates under the goods and services tax (GST) once revenue collections pick up, and said the top 28 per cent slab would be for a “very thin” list of luxury and sin goods.
The GST, rolled out on July 1, currently has four tax slabs — 5, 12 18 and 28 per cent. There is also a zero per cent tax rate on essential daily-use commodities.
Jaitley said the new indirect tax regime was started with multiple rates in order to keep the tax incidence around the same level that existed pre-GST. Stating that the country would eventually move to a two- tier GST, he said how fast it could be done would depend on the revenue position of the government.