RECOVERY IN THE WORKS More jobs have been created in the last 12 months than in 2012-13 and 2013-14, but it takes reasonable time for the economy to turn around, says Jaitley
THOSE WHO DO NOT HAVE UNDISCLOSED ASSETS OUTSIDE THE COUNTRY HAVE NOTHING TO FEAR (ABOUT THE NEW BLACK MONEY LAW) ON MINIMUM ALTERNATE TAX I HAVE GIVEN A CLARIFICATORY AMENDMENT WITH EFFECT FROM APRIL 1, 2015. SO, I HAVE RESOLVED THE PROBLEM FOR THE FUTURE. THE PAST WILL BE ANSWERED BY THE SUPREME COURT ON NEW I-T RETURN FORMS THE NEW REVISED FORM DOESN’T ASK YOU DETAILS OF EXPENDITURE, BUT SHOULDN’T THE TAXMEN HAVE SOME IDEA ABOUT THE CORRELATION BETWEEN YOUR INCOME AND EXPENDITURE OR THAT BETWEEN YOUR INCOME AND LIFESTYLE?
NEW DELHI: Finance minister Arun Jaitley on Friday said the Congress has positioned itself as “against development and growth”, otherwise there was no reason for the party to oppose reforms measures such as the goods and services tax (GST) Bill. The Indian economy is the world’s fastest growing major economy, but the best is yet to come, he added. Jaitley spoke to HT on a range of issues. Excerpts: The government’s data shows that India grew at a robust 7.3% in 2014-15. Corporate earnings, however, has recorded the weakest results in several years. Is the recovery not as real as official statisticians would have us believe? The Central Statistics Office (CSO) is a highly credible organisation. They have implemented the fresh basis for GDP calculation with effect from past date and therefore they apply a uniform figure. On the back of envelope calculations, you can’t judge GDP figures. For instance, if you take certain indicators like a 7%-plus growth rate in manufacturing last year, a huge jump in indirect taxation revenues in the first two months of this year even without the additional revenue raising measures, the jumping is signification. The revised service tax (14% from 12.36% earlier) start from June. These figures are for April and May. So, if you have a 39.5% jump in indirect tax revenue — customs, excise and service tax — it is actually indicative of increased economic activity. That’s the best yardstick.
Have we turned the corner yet? There were three significant legacies damaging to the economy that had been left behind by the United Progressive Alliance (UPA) government. The first was discretion in matters of allocation of natural resources. This led to serious allegations of corruption, criminal prosecution and cancellation of licences. The second was the credibility of the Indian taxation system. We were seen as regressive with unsustainable demands and retrospective legislation. The alibi given by (former finance minister) P Chidambaram on rectifying these mistakes is that he didn’t have 282 (seats in the Lok Sabha). Along with allies, which the UPA had managed, there were more than 300 (members in the Lok Sabha). These legislations, being financial legislations, only required to be approved by the Lok Sabha. So, this is a very poor alibi. In the first year of the NDA, we have been able to substantially correct both these problems in terms of following the transparent auction route and putting a lot of these adversarial taxation issues to rest. The third significant damage was to the banking sector. The NPAs were 6% (of total advances) and along with stressed assets, it was a total of 13%. With the slowdown in the economy, the possibility of correcting these NPAs was very challenging. For the first time, for the quarter-ending March 31, 2015, NPAs are down 5.2%. We have to wait for another two to three quarters both for the economy to pick up, for banks to take corrective action, and for us to put some resources into banks for capitalisation. That process has started, although it is still work in progress. Critics such as former finance minister P Chidambaram has pointed out that you have allowed the controversial retrospective tax issue to linger. Your comments. I have more than corrected it. We have not chosen to allow it to linger. Our policy is that, first, we will not legislate retrospectively. Two, no new notices on those controversial legislations will be issued without CBDT’s (Central Board of Direct Taxes) permission. Not a single notice has been issued. And third, pending disputes will be resolved through a judicial process — either through courts or arbitration. Some have been resolved in relation to transfer pricing, while some are still pending. And I hope they will be resolved. The NDA government had vowed to eliminate “tax terrorism”. Yet, what prompted the tax department to issue notices to FIIs for retrospective demand of minimum alternate tax (MAT)? Wasn’t it avoidable? There is no retrospective demand. There was a nonperformance between 2012 and 2014. The opinion of the Authority on Advance Rulings (AAR) saying that foreign institutional investors (FIIs) are not exempted from MAT came in 2012. The then finance ministry slept over the issue. It is only on March 31, 2015 when assessing authorities had to issue notices (because otherwise the demands would have become time-barred and the assessing authorities would have been questioned by our authorities as to why you didn’t act), that the FIIs woke up and asked the Supreme Court to resolve the issue. The government also asked the Supreme Court to resolve the issue. I had, in any case, given a clarificatory amendment with effect from April 1, 2015. So, I have resolved the problem for the future. The past will be answered by the Supreme Court.
India’s biggest tax reform initiative — GST — has cleared the Lok Sabha hurdle. But without bi-partisan support from the Congress, how do you expect to get it past the Rajya Sabha?
The Congress has positioned itself against development and growth. Otherwise, having pioneered GST, there is no reason for them to oppose it. I hope they reconsider their position and stick to their earlier pro-GST stance. I am targeting the date (April 1, 2016), for GST roll-out.
By when will you announce the details of the compliance window for disclosing overseas hidden assets? There is also a view that the new black money law is draconian. Your thoughts.
The period we will notify. It is different from the Voluntary Disclosure of Income Scheme (VDIS). In VDIS you just paid the tax after making a disclosure. Here a new tax is being imposed on undisclosed money outside. I have to give a period for compliance. Those who kept undisclosed money will be taxed 30% plus 30%, meaning 60%. In VDIS you don’t pay a higher tax. Secondly, after the compliance period closes, you are liable to pay 30% plus 90%, meaning 120%, and also suffer a prosecution. This is not how a VDIS is structured. It is only those who are uncomfortable with this law call it draconian. Those who do not have undisclosed assets outside the country have nothing to fear. How would you respond to your political opponents’ criticism that “aache din” remains elusive as no productive jobs have been created over the last one year? More jobs have been created in the last 12 months than 2012-13 and 2013-14 if we go by the same data. But to turn the economy, it takes a reasonable period of time. I think we should take some satisfaction in the fact that we are the world’s fastest-growing major economy and yet I believe that we are recovering. The best in our economy is yet to come. How do you plan to get labour reforms going in face of stiff opposition from trade unions? There are many ways of using labour reforms to add to efficiencies. The government will consider all options. The Opposition doesn’t seem to be in any mood to relent on its hard stance against it. How do you plan to get around it? Many farmers’ organisations have had series of meetings with me and I find their attitude quite positive. It is not correct that we did not take the Opposition into confidence. On both the bills (land acquisition and GST), we have discussed it, formally and informally, with opposition parties. That is why except the Congress, every party supported GST. Forecasts point towards deficient monsoon for the second successive year. Aren’t you worried given that food prices have started climbing sharply? At present, though I keep my fingers crossed, the monsoon seems to proceeding reasonably well. The forecast showed some shortage in the north-west, which is otherwise an irrigated region. Even if rains are deficient in that region, it should not affect food output or cause undue concern on inflation. How do you get banks to lend more to corporates to boost investments and spin jobs? I have had a meeting with banks today itself. They are in a position to lend. Retail credit off-take has improved. It is the corporate credit off-take that has to improve. Under-utilised overcapacity is one of the reasons, and they have probably over-leveraged themselves.
The new I-T return form, although simpler than the earlier 14-page one, still seeks to collect some details about people’s foreign travels etc. Why is it necessary?
I was in the US when the first form was released. I had no prior inkling of it. I immediately had it stopped. After consultation with stakeholders, I pushed for a far simpler procedure. It (the new revised form) doesn’t ask you details of expenditure, but shouldn’t the taxmen have some idea about the correlation between your income and expenditure or that between your income and lifestyle?
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Isn’t the 68,000-crore disinvestment target for this year ambitious, given the uncertain market conditions?
We have already got a lot of disinvestment (proposals) in the pipeline. I am only waiting for the markets to calm a little.
India has set a target of leapfrogging to 50 by 2016 in the World Bank’s Ease of Doing Business ranking from a lowly 142 currently. Is that achievable?
It is a very challenging task. Many procedures have been simplified in many ministries. But I would say it is still a work in progress. A lot of jobs will have to come in the manufacturing sector. Therefore, your interest rates will have to be competitive, land and power availability have to be there. The number of permissions required for starting a business have to be lower and easier.
Are you planning a redesign of UPA’s showpiece rural job scheme MNREGA?
It is not a redesign. But this year I intend adding to the quantum because I want to improve on rural income. I had said in the budget that I intend to put in more money in the rural sector if resources permit, and resources do permit now.
What’s the feedback you are getting from the global investment community?
There is a lot of interest and curiosity. The number of proposals has increased. For instance, last year, we had 353 proposals under the Foreign Investment Promotion Board, a 39% rise in the first year itself.
What has been the progress on financial inclusion schemes?
About 101.7 million policies have been sold under the two social sector security schemes — Jan Suraksha Bima and Jeevan Jyoti Bima. Besides, there are 155 million accounts under the Pradhan Mantri Jan Dhan Yojana. We intend to add more such schemes.
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