Finance Minister Arun Jaitley on Friday spelt out a roadmap for economic recovery by bringing civility in tax regime, maintaining low rates, rationalising subsidy system and boosting infrastructure and housing.
Replying to the general debate on the Budget for 2014-15 in lok Sabha, he asserted that being pro-business was necessary for generating more revenues and increasing spending that would benefit the poor and marginalised sections of the society through social sector programmes. He blamed the “policy paralysis” and retro tax amendment of the previous UPA regime for the current economic woes and promised to take a series of steps besides the Budgetary provisions for sustainable growth amid indications of some recovery.
Justifying the provisions in the Budget aimed at attracting private investments, including FDI in various sectors like Defence and Insurance, the Finance Minister said these were necessary to boost the industry and manufacturing within the country that would lead to job creation. The government is trying to restore confidence of domestic and foreign investors by bringing “civility” in taxation system and remove the perception of “tax terrorism”, he said.
Jaitley said he preferred low taxes to encourage economic activity. If you put higher taxes on products, people will buy products from outside. lower taxes will increase economic activities,” he said. On the subsidy policy, the Minister felt it was lopsided as even well off people avail of it through schemes like education scholarship and oil, putting more burden on the exchequer.
“We have reached a situation where subsidy burden is too high...Subsidies at times can become unquantifiable amount given to unidentified people. It is this situation which we need to correct,” he said. Jaitley said, “People like you and me should excludeourselves. Subsidies should be targetted so that they reach those who really need them. Trouble is you and I get it.”
Jaitley said the Budget has tried to substantially resolve the problem of retrospective tax amendment. “We have given cushion that we won’t tax people retrospectively, creating fresh liabilities,” he said. He said the retro amendment the UPA Government had destabilised business which led to several questions that India did not have a stable tax policy. So the world was not ready to accept that India had a conducive business atmosphere, he said.
“We are trying create an environment where GST can be enabled in this country,” he said. Expressing Government’s determination to containinflation, Jaitley cited the “strict action” taken to cap prices of onion at Rs 25/kg when there was an increasing trend and drew contrast to UPA tenure when onion price touched Rs 100/kg.
The issue of retro tax, Jaitley said, could have been tackled by the UPA Government as there was no difference of opinion among political parties on the issue. Observing that Rs 4 lakh crore was locked up in tax litigations, he said steps have been taken in budget to address the matter. Finance Minister also said that Swiss authorities have raised some legal issues after India wrote to them for providing a list of illegal bank account holders in Switzerland.
Jaitley gave this information in the lok Sabha while asserting that Government was making all efforts to procure the list of the illegal bank account holders in Switzerland and that it was collecting evidence in this regard. He also said that India was in the process of communicating with the Swiss authorities and enter into an agreement which was in the best interest of the country within the parameters of Swiss laws.