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Arun Jaitley says India needs to create productive environment for investors

ANI  |  New Delhi 

Finance Minister, Arun Jaitley, said here on Saturday that India needs to create such a productive environment for investors, that makes them feel that doing business in India is profitable.

Jaitley said that the essence of economy starts from investment.

"We have to get our banked and unbanked resources together. In some area where we think it's appropriate we have to get the investment from outside that also becomes an additional resource. We then have to create an environment that doing business in India is profitable and it is this economic activity that will generate jobs, revenue, which enriches the government, which in turn can create infrastructure, which in turn can use these resources for the poverty alleviation schemes. So essence is, all starts with investment," said Jaitley.

Expectations had been high that the government would utilise India's strongest election mandate in 30 years to take radical steps comparable to the 1991 market reforms that unleashed an era of high economic growth.

But in a bid to halt a two-year spell of weak growth, the government instead announced incremental steps to boost capital spending in Asia's third largest economy and reassure foreign investors that they would get fair treatment.

Jaitley further added that unbanked money should be brought under the ambit of banking system which can be used for greater economic purposes.

"I think unbanked money India, which is fairly large, gets into the banking system; its utilisation for the purposes of the economy becomes not only more formal but also extremely useful," he added.

Jaitley Members of the Parliament (MP) during his maiden budget presentation that he would uphold the fiscal deficit target for this year inherited from the last government - 4.1 percent of gross domestic product - despite expectations he would be forced to raise it due to weak revenue and high subsidy costs.

Jailtey announced an eight percent rise in spending, roughly unchanged after taking inflation into account. The government will also seek to raise a record $13 billion from selling state assets - nearly four times what the previous government raised in the fiscal year ended in March 2014.

Jaitley raised the minimum income level at which people start paying tax and hiked levies on cigarettes and soft drinks.

In another signature initiative, the government will launch a tax reform this year to unify the 29 states into a common market, a measure that would boost revenue while making it easier to do business.

Investors have piled into Indian stocks on hopes that Modi's leadership and mandate would break a logjam thwarting a host of reforms during the 10-year tenure of his predecessor Manmohan Singh, whose coalition government became increasingly divided.

Modi, 63, won election with a pledge to create jobs for the 1 million people who enter India's workforce every month. Since taking office, he has warned that Indians should expect "bitter medicine".

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First Published: Sat, July 19 2014. 18:29 IST