Ahead of the union Budget due in March, finance minister Arun Jaitley said on Monday that the government has initiated steps to rationalise subsidies, which will be announced in the budget, and has already started the process with transfer of the cooking gas subsidy to consumers.
In an interaction with captains of industry in Chennai organised by the Confederation of Indian Industries (CII), Jaitley said in the coming months all subsidies would be rationalised and targeted directly at the poor.
Recommendations of the Expenditure Commission headed by former Reserve Bank of India governor Bimal Jalan would be incorporated in the budget, he added.
"Budget is a one-day affair; and in the other days too policies will be continued to achieve economic growth of 7 to 8 per cent. Compared to last year, this year is better in terms of economic outlook and we hope to continue with the reforms to achieve higher growth and compete with countries in attracting investments," he said.
Stressing the need to improve infrastructure, he said the government is committed to involve the private sector. "The old public-private partnership (PPP) model is stressed, but needs to be revived," Jaitley said.
Countering the criticism that the government is overusing the ordinance route to pass legislation – on which President Pranab Mukherjee commented on Monday - Jaitely said, "In the last seven to eight months, the government has restored its credibility through several reforms like increasing foreign direct investment in the insurance sector. We need to have a unified vision for the country, where state governments and the Centre look beyond ideological differences for the common good."
Promising to improve the investment climate in the country, the minister said the proposed goods and services tax or GST will lead to increasing investment. "From day one of implementing of the GST, consuming states will benefit. But for manufacturing states it may take a while but the government will see to it that no state loses a single rupee by implementing GST," he said. States will also earn through a new venue of taxation called the service tax, he said.
TVS Motor Company's chairman Venu Srinivasan wanted removal of draconian provisions in the new Company Law. The finance minister countered that the chambers of commerce had not pointed out lacunae in the draft bill.
"Some provisions in the company law have been taken with comma and full stop from the Prevention of Terrorism Act (POTA) and its previous avatar the TADA and Narcotics Act. The Lok Sabha has passed 15 amendments to the new law but it is pending before the Rajya Sabha. With these provisions it will be difficult to do business," admitted Jaitley. The new law also allows rule of a company by minority, he said.
The minister also said that the government was seized of issues relating to several free trade agreements (FTAs). "FTA was an easy deliverable. Only when the show starts pinching we see its negative," he said. "In some cases rules of origin are violated and we are seized of the matter," he said.
(Also see: Budget to be more transparent; no deficit cover-ups: Jaitley)