In signs of no thaw with Congress on Goods and Services Tax (GST), finance minister Arun Jaitley on Wednesday described as preposterous the opposition party's demand for putting a cap on tax rate in the constitution amendment Bill saying nowhere in the world tariffs are mentioned in the statute.
"Three new propositions are now raised (by Congress) including a preposterous one that tariff must be mentioned in Constitution of India. Now if they can tell me that anywhere else in the world this happens that tariffs are mentioned in Constitution… So every time there is a drought, flood and you need to increase the tax rate, you have to first go to all states in India to change the tax rate. This is something which is just not possible," he said.
"GST is certainly going to come. I have already conveyed to Congress leaders that I am willing to go to the states for the one per cent thing. I have privately conveyed that and I have no hesitation in admitting that publicly," Jaitley said at a discussion organised by NDTV at the World Economic Forum in Davos.
With global headwinds hitting emerging markets as well, the FM said volatility has become a global norm, but India can certainly grow at 8-9 per cent in a friendlier global climate. "Certainly, the world is facing a difficult and challenging situation. I don't think we are going into extreme conditions because there is predictability but volatility today is the norm and no country is immune to it," he said.
Admitting that exports have shrunk and markets are going through turmoil, Jaitley said the government is always trying to prepare itself to meet such challenges. "The fact is we are (the) fastest growing economy, but we can do much better. Given a better climate and global situation, we can do much better. In a friendly global environment, we can do it (8-9 per cent). We had two bad monsoons while domestic and global issues impacted several sectors and that in turn has impacted banks. We are growing at 7-7.5 per cent. In a more favourable environment, getting an extra 1-1.5 per cent is not difficult," he added.
The FM said, "Oil prices have helped India replan the government expenditure. One of the biggest reforms that have happened today is rationalisation of subsidies".
As bad debts weigh down on banks, Jaitley said the process to de-stress the banks has been initiated while the government may add to the re-capitalisation of public sector lenders.
"More things are being done. Steps are being taken for recapitalisation of banks. We have announced the programme and we probably will have to add to that programme," Jaitley said.
"Besides, RBI has asked banks to line up the bad debts they need to sell. The problem is not widespread and is limited to a few sectors… I am aware that both private and public sector banks are in touch with the concerned industry groups. We do not want to create a panic situation. Destressing of banks need to be tackled and the process for the same has been initiated," he added.