Appealing to Opposition parties not to play obstructionist role by preventing reforms, Finance Minister Arun Jaitley on Tuesday said Country has the historic opportunity to grow and the GDP is expected to go beyond 8 per cent next year, overtaking China. Replying to the concerns raised by the opposition during the debate on the budget, Jaitley also rejected the charge that the government is pro-rich as it had proposed reduction of corporate tax from 30 per cent to 25 per cent. Finance Minister hit back saying that this was an idea he had borrowed the idea from Direct Taxes Code prepared by UPA's Finance Minister P Chidambaram.
Jaitley strongly justified the government's quest for opening more sectors for foreign investment, saying more and more funds are required to create jobs, develop infrastructure and undertake social welfare programmes. In a veiled message to RBI, Jaitley also made a case for reduction in interest rates, warning that the growth will otherwise suffer.
"This is a historic opportunity where India has real chance of growing. The world also sees India as a bright spot. We must use this opportunity. I appeal with folded hands... let politics of obstructionsim not go to next stage," said Jaitley. He said the global economy situation suits India as Brazil faces challenge, Europe has slowed down and China's 7 per cent is new normal. "IMF says India will overtake China," he added. Jaitley defended the move to reduce corporate tax from 30 per cent to 25 per cent over four years, saying it was necessary to create a competitive climate so that investors are encouraged to pump in funds.
The effective tax rate is 23 per cent globally, 21.9 per cent in ASEAN nations and 19.66 per cent in Europe, the Finance Minister said and asked "Who will invest in India if tax is 30 per cent." Targeting Congress for its attack over the proposal to reduce taxes for corporates, he said, "I must confess this was not my original idea. I borrowed it from UPA."
He said the proposal was first made in the DTC by then Finance Minister Chidambaram. "I said it is good idea because in rest of world, it 21 per cent...But when I bring it, Congress says it is pro-corporate." Responding to members who said nothing has been given to the middle class, Jaitley said the government has given exemption to income tax payee to the tune of Rs 1,70,000 in two budgets over the last one year -- Rs 1 lakh last year and Rs 70,000 this year.
Also tax exemption has been granted to the investment of upto Rs 50,000 for pension. "Effort is to create pensionless society into pensioned society," he said. On abolition of Wealth Tax, he said an additional surcharge of 2 per cent on super rich has been imposed which will yield the exchequer an additional Rs 9,000 crore anually.
To the attack for not passing the entire benefit of fall in crude oil prices to the consumers, Jaitley said petroleum prices were cut 11 times. However, the entire benefit could not be passed on to the consumers as oil PSUs could not be allowed to "die" as they were suffering losses to the tune of Rs 30,000 crore on inventory, he said. He added that money that the government saves is diverted to highways and railways, which are key drivers of the economy.