FM Arun Jaitley questions global agencies

Finance minister Arun Jaitley on Thursday said the government will continue tax reforms, even as he criticised global agencies for not fully appreciating the efforts made by the government.

He also said that the government will meet its target of reining in fiscal deficit at 3.5% of GDP, even though a gap between the Centre's expenditure  and income in the first half of the current financial year touched almost 84% of the Budget Estimates.

"I must acknowledge and state that the kind of steps we have taken, we still have not got from international agencies the full recognition of the effort we have put in," he said at Economic Editors'Conference.

The comment assumes significance as India continues to be ranked low, at 130th position, in terms of ease of doing business index released recently by the World Bank. Besides, global rating agency S&Pruled out an upgrade for India from the lowest investment grade in the next two years. Moody's Investors Service too   expressed its inability to upgrade India stating in the next two years because of muted private investment and rising NPAs. 

Both the statements have drawn the government’s ire which has gone on to question these institutions’ credibility. 

Speaking on the Goods and Service Tax, Jaitley said the Centre was making all efforts to build consensus on sticky issues, especially on jurisdiction of assessees, to ensure GST roll out from the scheduled date ofApril 1 next year. 

"We are making all efforts to introduce GST from April1, 2017. GST has to be implemented latest by September 16, 2017, and if it is not implemented by then, then states will not be able to collect their share of taxes, and hence there is not enough scope to further delay the decision,"he said. 

"We have already sorted out ten issues. The issue of dual control still remains, there is no reason why we will not be able to workout a reasonable solution on this," he said. 

Besides this, he said parallel reforms are also in the pipe line in direct tax structure. He said tax collection this year is reasonably good, there is spurt in public expenditure and local demand is increasing. Hence there will be positive impact of recent decision of demonetising of higher value currency notes. 

The all powerful GST Council, which is chaired by the Union Finance Minister and has representations from state, has already decided on a four-tier rate structure — 5, 12, 18 and 28%  — with a cess over anda bove the peak rate for luxury and demerit goods. 

"One of the objectives has been that since the GST Council is a federal decision-making process and the manner in which it functions in the initial years will lay down the precedent for the future rather than resorting to voting and division in every small issue. We have been trying to discuss, re-discuss and then reach a consensus and so far most of the major issues we have been able to resolve through consensus," Jaitley said. 

The issue of dual control, which deals with who will control which set of assessees under GST, has been holding back the negotiations.Jaitley and his state counterparts will meet on November 20 to work out a"political solution" to the issue and the GST Council will formally take up the issue on November 24-25. 

"Only the last stages (of decision making) remain and I do hope we (GST Council) are able to resolve that through a larger consensus as well. And this form of functioning of the Council where discussion and consensus is a preferred option is a precedent we are trying in a federal decision-making body to establish," Jaitley said. 

Also at the conference were senior government bureaucrats. Economic Affairs Secretary Shaktikanta Das said that allowing foreign institutional investors (FIIs) in commodity trading was under consideration,but no decision has been taken. "Many suggestions have come with regard to permitting FIIs into commodity trading, but no decision has been taken. The matter is under consideration. The matter is also under consideration of Sebi," Das said. 

"If the Sebi board after taking a view makes recommendation as a regulator if they permit... if it requires government permission, we will see. But so far, no decision has been taken," he said. 

separately, The finance minister  denied any move to digitise personal lockers in banks. "Completely factually incorrect. There is no such proposal," he told a news channel. Rumours are going around on social media that the government may next digitise bank lockers which would be opened in presence of revenue officials.