Finance Minister outlines immediate tasks before the government next year

Union Finance and Corporate Affairs Minister, Mr. Arun Jaitley, outlined the imperative need to complete the task of strengthening the banks through capitalization to enable them to lend to the MSME sector and trade that is now moving into the formal economy. The lending capacity of the bank has hitherto been constrained due to capital inadequacy and the task before the government is to fix the banks so that they were no longer averse to lending to small borrowers.

The Finance Minister said that it was also important to keep the momentum of development of urban and rural infrastructure going. Infrastructure development was at the core of India's growth story, he said, adding that while highways, ports and aviation were growing well, the railways need to speed up its infrastructure development schemes - from railway stations to quality trains and the number of superfast trains.

With regard to the development in rural areas, Mr. Jaitley said that main focus of expenditure in the next few years would be on housing and sanitation.

Responding to the suggestions of Mr. Pankaj Patel, President of FICCI, the Finance Minister said that after the unified GST is implemented it would take some time to rationalize taxes. It was important to continue with structural reforms for greater formalization of the economy, he said, adding that it was only when the tax base is widened in a formalized economy is rationalization of direct and indirect taxes possible.

Mr. Patel, in his welcome remarks, pointed out that globally, nations were moving towards a low tax regime with a focus on the internal economy and a territorial taxation regime. It was time to re-think whether India should adopt this course or look for a new model of taxation that supports exports and growth, he said.

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