Rounding on critics who have complained
“We have restored the credibility of the decision-making process in India,” he said. “Our growth rates are much faster, our job creation is faster, our fiscal deficit is totally coming under control, our current account deficit has never been as good.”
Prime Minister Narendra Modi and his Bharatiya Janata party won a landslide victory in last May’s general election on promises to end corruption and rejuvenate India’s sagging economy. But they have ended their first year facing a tax row with global fund managers, parliamentary delays to a land law and grumbles from business leaders disappointed by the gradualist approach to reform.
Mr Jaitley, however, pledged to push a more assertive agenda during the next phase of the government’s five-year term, including a bankruptcy law to help restart private investment and a plan to pump billions of dollars into irrigation, roads and other projects to boost the country’s large rural economy.
“We are looking at a bankruptcy court. We are looking at a dispute resolution mechanism in relation to public contracts. We are looking at public procurement law,” he said. “We are looking at a policy where we could perhaps eliminate a large number of prior permissions [for projects] and replace them with a regulatory mechanism.”
Mr Jaitley added: “In the last one year, every decision we have taken points to one direction: we’ve been trying to reform and liberalise. In the next few years of this government’s term we intend to step up a huge amount of investment as far as rural infrastructure is concerned.”
The Indian finance minister was confident that the world’s largest democracy could grow at a faster pace than China, saying “I think we can do even better” than the more than 7 per cent a year achieved by its rival and neighbour. But he added that outpacing China’s growth “doesn’t give me satisfaction” as the Chinese economy was still much larger.
Mr Jaitley said the central government alone would boost infrastructure spending in this financial year by $11bn. The government has already announced a plan for $137bn of spending on the railways over the next five years.
On tax, he said “in the next few days” he would announce the scope of a committee designed to defuse a $6bn tax row with global investors and tackle a range of other “legacy” problems over retrospective tax demands that had dented the country’s reputation.
Mr Jaitley, despite opposition from the Congress party in the upper house of parliament, said he was determined to stick to his target for introducing a long-delayed nationwide goods and services tax, which would replace a plethora of state fees and taxes and transform India’s 29 states into a single market as well as proving the government’s commitment to economic reform.
“I want to beat the deadline of 1st April 2016,” he said. “I’m conscious of the fact that it’s cutting [it] fine. But yet I want to make a huge effort.”
Mr Jaitley said he had no plans “at the moment” to fully privatise big state-controlled banks and energy companies, but he would launch a “strategic disinvestment” programme this year to sell lossmaking public businesses such as government-owned hotel groups.
He added that Mr Modi’s administration had tackled corruption and that people no longer lined up “for favours” in government offices in New Delhi.
The sum total of incremental reforms was “significant”, Mr Jaitley said. “We think compared to most countries we are doing much better, and if you continue to accelerate our reforms and are able to bring in more capital into India, this is a real chance for us.”