)
The past six months might have seen a series of positive developments around the Goods and Services Tax (GST), but its implementation will happen only after a new government comes to power after the elections in April next year.
Click here to connect with us on WhatsApp
Prime Minister Manmohan Singh said here today that there were difficulties in getting states to surrender their power to tax,and for GST to happen, a Constitutional amendment was required. “We will have elections in April 2014… I think there will be a strong effort by whichever government is in power that time to move towards the GST”. The implementation was inevitable as there was a general agreement among professionals and all shades of opinion agreed that India needed GST to help its growth story, he added.
. For India, it may be China everywhere in Tokyo
Singh was replying to a question on whether he could give a timeline to the implementation of GST at a luncheon organised by The Japan Business Federation, commonly referred to as Keidanren, and the Indo-Japan Business Leaders Forum.
GST, a tax reform that seeks to create one common market for all goods and services in India, has been long delayed due to differences between the Centre and states over its design and issue of central sales tax compensation. Singh's statement is a tacit acknowledgement of the fact that such an amendment looked difficult in a deeply divided Parliament.
The Prime Minister, however, was in a relaxed mood throughout and even cracked jokes while replying to questions from the audience comprising some of the biggest names in Japan and India Inc. When a Sumitomo Mitsui Banking Corporation executive wanted to know some specific details on relaxation of priority sector lending norms, Singh advised the gentleman to address the question to the finance ministry and the Reserve Bank of India. "I am sure you know about the saying that the higher you go, the lesser you know," he said. The applause simply refused to die down.
In response to another question, Singh said he was repeatedly told that Japanese companies ranked India the most promising long-term destination. Yet, he, found out India accounted for only four per cent of total Japanese outward investment flow into Asia.
When someone wanted to know the reasons for the inordinate delay in clearing bottlenecks in India, Singh said it's better to take a considered view as "sometimes the best can be the enemy of the good". The audience was amused, though it didn’t look too impressed this time.
Singh assured Japanese banks that their proposal for more freedom on opening of branches would be considered as he personally believed they added net value to the country. On the demand to relax priority sector lending norms, Singh, however, took a tough stand. Pointing out that some specific cases could be considered as he wanted more Japanese banks to come into India, he said foreign banks should also learn to adjust to the environment in the countries they operate in order to gain more acceptability.
Singh reiterated his vision that the Indian economy would soon bounce back to eight per cent annual growth, creating enormous opportunities for Japanese business. On the basis for his confidence, Singh said "a capital output ratio of 4:1, a savings rate of over 30 per cent and an investment rate of 35 per cent will easily yield a growth rate of about eight per cent."
Singh said India has targeted an investment of around $1 trillion in infrastructure over the 12thPlan period with half of it coming from the private sector and public-private partnership. He hoped Japanese business will pick up a large share of the investment opportunities. For this, he was willing to consider innovative solutions.
He was however non-committal on Japan’s offer for financial and technical support for a detailed project report for the Mumbai-Ahmedabad high speed railway route.
Later, speaking at a meeting of the Japan-India Association in the evening, Singh mentioned his Japanese counterpart Shinzo Abe’s speech in the Indian Parliament in 2007, when he spoke of the “confluence of the two seas” — the Pacific and the Indian oceans — which has defined the new framework for the bilateral relationship.
Singh suggested three areas of cooperation — strengthening regional forums that will help develop habits of consultation and cooperation; promotion of wider and deeper economic integration; and focus on maritime security across the linked regions of the Indian and Pacific oceans.
“Our relationship with Japan has been at the heart of our Look East Policy. Japan inspired Asia's surge to prosperity and it remains integral to Asia’s future. The world has a huge stake in Japan’s success,” the Prime Minister said.
Another neighbour of India would be listening to at least this part quite keenly.
JAPAN DIARY
Padma award in Tokyo
Hotel Oreku in Tokyo was the venue of an unusual ceremony on Tuesday: Prime Minister Manmohan Singh conferred the Padma Shri award on Noburu Karashima, an eminent Japanese scholar, for his contribution in literature and education. Karashima, who had spent several years as a research scholar and is an acknowledged authority on medieval South Indian inscriptions, could not be present for the award ceremony in New Delhi last month for health reasons. As the PM and the amiable professor bowed to each other, there was a standing ovation from the 1,000-plus crowd.
Rich House
It's not the Japanese economy alone that is feeling good about Abenomics. The elected representatives are feeling good, too. According to a weekly survey, the assets of the Lower House lawmakers have grown for the first time since 1993. Since the previous survey in 2010, the average value of assets held by the 184 lawmakers has nearly doubled to ¥22.9 million.
Low stock
The Nikkei has been down over the past few days after a stupendous rise ever since Abenomics came into being. But it seems the average Japanese couldn't care less. Shares represent only seven per cent of household financial assets, compared with more than one quarter in the US. Four-fifths of Japanese households have never owned a security and 88 per cent have never invested in a mutual fund, according to the Japan Securities Dealers Association. Indians are in good company.
