Demonetisation, GST booster shots for real economy: Arun Jaitley
12 October 2017
The series of reforms initiated by the Narendra Modi government, including last year's demonetisation of high-value currency and the goods and services tax (GST) introduced in July this year, have put the Indian economy on a ''far more stronger track'', union finance minister Arun Jaitley has said.
Speaking at the School of International Public Affairs of Columbia University in New York on Tuesday, the finance minister said the recent blip in India's economic growth is only a short-term adjustment problem and that the real economy will emerge even stronger in the coming quarters.
''These are institutional reforms. These are structural changes. And these structural changes, I think have put the Indian economy on a far more sound track so that we can look forward for a much cleaner much bigger India economy in the days and years to come,'' Jaitley said, addressing the students of the Columbia University in New York.
Jaitley, who is on a week-long visit to the US to attend the annual meetings of the International Monetary Fund and World Bank, said, ''Consistent steps have been taken to formalise and expand the more formal economy as far as India is concerned. And wanting to formalise that economy, one after the other steps are taken against shadow economy.''
''Some of these steps, the demonetisation, the GST because the GST could lead to de-stocking of existing stocks can have for a quarter or so a transient impact on manufacturing. But in the long run, these are institutional reforms and structural changes,'' he said.
The finance minister said the series of economic reforms that India has undertaken since 1991, has given rise to a new Indian model, which now seems to be emerging.
''Even as the Indian economic reforms started a few decades late, the direction that India followed is probably the direction that helped the country considerably. And, therefore, any form of debate, discussion or suggestions to go back to more regulation, to go back to stricter controls, not to integrate itself, I think, we are in the process of dispelling any notion of that kind,'' he said.
Jaitley said there is a broad consensus on reforms in India and the government has convinced the people that growth needs more investments and that the current levels of investments are grossly inadequate. There could still be some hurdles to attracting investments, he said, adding, ''What you require is an additionality of evidence. And therefore, you have to create an environment in India where people find India a friendly place to invest in.''
''Our doors were too narrow. Our limits did not allow them. The second hurdle was even when we allowed them, between the decision to start businesses in India and the eventual commencement of business. You could spend years and years before you got to your permissions,'' he said. ''India has opened up in sectors where there was a scope for opening up. And not in a single case the government faced a protest,'' he said.