New Delhi, (IANS) Even as India is merging some state-run banks, Finance Minister Arun Jaitley on Wednesday said there was no move to privatise them. He also said the target date of April 1 next year to implement a pan-India goods and services tax regime will be met.
“I don’t think that public or political opinion has converged to the point where we can think of privatisation of our banking sector,” Jaitley told the Economist India Summit at the Taj Palace Hotel here. “Health of public sector banks is first priority for the government.”
Talking about the bad loans haunting the banking sector, he said that a large part of these were because of sectoral stresses.
“Government has already initiated a large number of steps. We have announced a package of reforms in textile, real estate, power sector, etc. Work is in progress,” he said.
On Goods and Services Tax (GST), a major reform in indirect taxation that had been waiting for long, he said, it would go a long way in stabilising the country’s various levies and bring them down in the long run.
“Once implemented the whole country will become a single market. Inefficiencies will increase, it will plug the leakages. It will stabilise the tax rates in the long run and even bring them down once GST is effectively implemented,” he said.
“There is a national aspiration in support of GST reform. We have set stiff target to implement it. We are running against time to implement GST, but we would certainly like to give it a try.”
Jaitley said that there is still lot of work to be done for implementation of the GST. With the states ratifying the constitutional amendment, it will now be sent to the President post which it will be notified by the government.
There are also certain issues remaining in the GST that need to be addressed, he said.
“At the last meeting of empowered committee, we discussed the rate of GST and unanimously the state finance ministers took the position that the eventual rate will be fixed in the Council,” he added.
“Fixing the GST rate is a balancing act. It should be revenue neutral to maintain current level of revenues but still be reasonable enough not to impose additional burden on taxpayers.”
He said that the government aims to bring the central legislation on GST in the winter session of the Parliament while the states will have to pass their own legislation.
Jaitley said that the reform oriented taxation regime coming into place was greatly influenced by public opinion which was in its favour.
“One of the strengths of Indian democracy is that the reform oriented proposals had never had to be abandoned. They may have been delayed. Constituencies that support reforms is much larger and the effect of public opinion on political parties for reform is very high,” he said.
Talking about the low investment from the private sector, the Finance Minister hoped that it may increase on the back of other economic indicators – policy changes, government spending, record foreign direct investment (FDI) – giving positive signs to the economy.
“Say, if we maintain 9 per cent growth in services and 9 per cent in manufacturing, with improved agriculture domestic demand will increase. The situation will give some scope to the private sector that has been facing its own challenges,” he said.