Demonetisation, GST can end crony capitalism and tax evasion: Arun Jaitley
ET Bureau|
Oct 29, 2017, 06.40 AM IST
Structural economic reforms initiated by the government have a long way to go and would be implemented with unwavering commitment despite criticisms, though the pace may vary, Finance Minister Arun Jaitley told an audience at the ET Awards for Corporate Excellence in Mumbai on Saturday.
“It is extremely important that when you get onto a path of reform, you know all the directions, and under no circumstance you should deviate from them,” Jaitley told the gathering, which included Reliance Industries chairman Mukesh Ambani and Bharti Airtel founder Sunil Mittal. “The reform pace may slow down for a while, but you must never reverse the pace. There will never be a finishing line.”
Prime Minister Narendra Modi’s government, which initiated some revolutionary reforms such as bringing the entire nation under the single goods and services tax (GST), and the cleanup of the banking system by backing the Reserve Bank of India’s efforts, is being criticised for disrupting the economy. But these reforms were long-awaited ones since these could end crony capitalism and tax evasion.
The whole idea of reforms is to make India a cleaner economy, said Jaitley. “If India aspires to be the fastest growing among the major economies in the world, you cannot have an economy where the size of the shadow economy is larger than the apparent economy itself.”
State-run banks are being capitalised with Rs 2.1 lakh crore of funds which should be music to the ears of investors after cleaning up the banking system. “As far as banking is concerned we have been extremely transparent,” said Jaitley. “Our banks have been lending excessively and through various restructuring processes elongating those loans. Till 2015 nobody knew what the real picture was... it was hidden below the carpet. And no economy can survive if the main source of finance is in such a non-transparent position. And, therefore, this has to be addressed not by any kind of small move but you needed to have a much larger impact as far as the banking structure is concerned.”
Jaitley rubbished the campaign that Indian tax structures are complicated and are among the highest in the world. Instead, the evaders should use the opportunity to pay taxes, which is a “patriotic duty”.
“We in India today are providing the lowest tax rate anywhere in the world, so as to incentivise people to get in,” the finance minister added.
“Last year we created a 5% slab rate in direct tax, virtually you don’t have a 5% slab rate anywhere in the world... therefore (we have) to nudge people to try and get into this structure itself. If you link this with the PM’s historic decision on demonetisation and the series of steps against black money that we took in order to do away with the shadow economy, it was so that the tax base in the country increases.”
“It is extremely important that when you get onto a path of reform, you know all the directions, and under no circumstance you should deviate from them,” Jaitley told the gathering, which included Reliance Industries chairman Mukesh Ambani and Bharti Airtel founder Sunil Mittal. “The reform pace may slow down for a while, but you must never reverse the pace. There will never be a finishing line.”
Prime Minister Narendra Modi’s government, which initiated some revolutionary reforms such as bringing the entire nation under the single goods and services tax (GST), and the cleanup of the banking system by backing the Reserve Bank of India’s efforts, is being criticised for disrupting the economy. But these reforms were long-awaited ones since these could end crony capitalism and tax evasion.
The whole idea of reforms is to make India a cleaner economy, said Jaitley. “If India aspires to be the fastest growing among the major economies in the world, you cannot have an economy where the size of the shadow economy is larger than the apparent economy itself.”
State-run banks are being capitalised with Rs 2.1 lakh crore of funds which should be music to the ears of investors after cleaning up the banking system. “As far as banking is concerned we have been extremely transparent,” said Jaitley. “Our banks have been lending excessively and through various restructuring processes elongating those loans. Till 2015 nobody knew what the real picture was... it was hidden below the carpet. And no economy can survive if the main source of finance is in such a non-transparent position. And, therefore, this has to be addressed not by any kind of small move but you needed to have a much larger impact as far as the banking structure is concerned.”
Jaitley rubbished the campaign that Indian tax structures are complicated and are among the highest in the world. Instead, the evaders should use the opportunity to pay taxes, which is a “patriotic duty”.
“We in India today are providing the lowest tax rate anywhere in the world, so as to incentivise people to get in,” the finance minister added.
“Last year we created a 5% slab rate in direct tax, virtually you don’t have a 5% slab rate anywhere in the world... therefore (we have) to nudge people to try and get into this structure itself. If you link this with the PM’s historic decision on demonetisation and the series of steps against black money that we took in order to do away with the shadow economy, it was so that the tax base in the country increases.”
