Union Minister for Finance, Corporate Affairs, Information, and Broadcasting Arun Jaitley with British Journalist Nik Gowing during The Singapore Summit in Singapore on September 18
Union Minister for Finance, Corporate Affairs, Information, and Broadcasting Arun Jaitley with British Journalist Nik Gowing during The Singapore Summit in Singapore on September 18

HONG KONG: Asserting that India would give better returns on investments than many other countries, Finance Minister Arun Jaitley said here foreign investments can provide great additional resources for infrastructure and other sectors.

He said that the government is giving special focus on improving the ease of doing business in the country with initiatives like ‘Make In India’ designed to boost the manufacturing sector that has huge potential.

“India will give better returns than many other countries,” Jaitley said here addressing investors and business leaders.

He said that foreign investments can give great additional resources and that the country’s infrastructure sector needs huge investments.

“Railways, highways and power sectors are among those that require funds and the success of projects in these areas would largely depend on bankability,” Jaitley said.

Jaitley was here seeking to attract foreign investors, including large asset managers, to the Indian markets. “Special focus is being given on improving ease of doing business. Investors have felt in the past that the procedures have been difficult in India,” he said.

Digital India and Make in India (initiatives) are designed to give special boost to manufacturing and India has huge potential in these areas, he added.

GDP growth
Jaitley said all macroeconomic parameters including fiscal deficit and inflation appear positive and hoped that GDP growth would outperform 7.3 per cent rate of last year.

He said the government is conscious of the fact that it needs large investments and resources and domestic investments were inadequate.

“Certainly, I think international investment is going to be a great source of resource for us and with all these economic activities (ongoing and fresh reforms) planned, even in the midst of somewhat gloomier global situation, I think India has the potential to stand out as a relative brighter spot.

“We grew by 7.3 per cent last year and I hope that we are able to outperform our last year’s growth numbers,” Jaitley said here at the inaugural APIC-India Capital Markets and Institutional Investors Summit.

The minister said he was conscious of the adversities that would come in the way and would need to be overcome.

“India ended the last year with 7.3 per cent growth rate. We had good fiscal figures, Fiscal deficit is gradually coming down and we are now aiming to bring it down in the next 2-3 years to 3 per cent.

“Current account deficit down to 1.2 per cent, foreign exchange reserves are very high, inflation is very much in the control and therefore the macroeconomic indications all seem to be positive. But this is in the midst of a global slowdown.

“This is despite global headwinds that are not helping us and at times are creating adversities, particularly the external factors have impacted our exports and in favorable global conditions we can improve on the growth rate of 7.3 per cent in a significant way,” he said. Jaitley further said this interaction with investment industry leaders could not have come at a better time.

“Time is significant as the world itself is witnessing a slowdown. The growth estimates for the world economy have been projected downwards. Along with that there has been a slowdown in the global demand and therefore a re-adjustment of investment by the investing community would obviously be taking place,” Jaitley said.

Referring to slowdown in China, he said there have been concerns with regard to developments in this side of the world, particularly China.

“But I have not the least doubt in my mind that a very large economy that grew at a rapid pace in the last three decades, would still have to shoulder a large part of the burden of the global growth.

“Of course, investors would also be looking at alternate sources for their investments and certainly they would be very carefully assessing which those alternative sources are” he added.

There has always been a cautious optimism in the investors’ mind about India, he said.
“I say this because on one hand they have assessed India has a very large market, a market where people have become very aspirational and want to grow, a market which has a huge pool of human talent but also a country which at certain critical times has not availed of the opportunities.

“Therefore the cautiousness in that optimism always remains there,” he said, adding that now there are some significant reasons and factors where India is now changing.

Power distribution
According to him, some states were not charging adequate tariff for electricity as a result of which the health of power distribution companies is being affected.

“These states cannot expect the PSU banks to fund the deficit of discoms,” Jaitley stressed.
Many discoms are grappling with acute financial stress.

Jaitley said that a key priority of the government was to strengthen the PSU banks. “Some weaker banks could be merged with stronger banks as just diluting stake would not resolve the problem of NPAs (non performing assets),” he added.

Acknowledging that stalled projects have impacted the balance sheets of private sector companies, Jaitley said the proposed national investment and infrastructure fund would be a “great enabler” to attract investment as well as help repair the balance sheets of affected firms.

The fund would operate independent of the government just as another investor, he added.
Noting that international investors are showing great interest in railways-related areas, the Finance Minister said the government has kick started many stalled projects in the highways sector. He also said that pension funds can play a major role in the highways space.

In response to queries about opportunities in the manufacturing and construction businesses, the Finance Minister said he would be happy to encourage investment in the manufacturing sector.

According to Jaitley, setting up of 100 smart cities would give a boost to urbanization.

Besides, he expressed hope that many states would amend their land acquisition laws.
The Finance Minister, along with a large business delegation from India, had meetings with private equity, asset management companies and other institutional investors here.

GST rollout
Promising a simple and globally competitive tax regime, Jaitley said the government is confident of the new GST regime to roll out from the next fiscal and expressed confidence about an early resolution of pending disputes on direct taxes front.

While expressing confidence that GST would be passed in the Rajya Sabha as well in the next session, he said it’s not necessary to implement it from April 1, 2016, itself as it is a transactional tax and can come into effect from the first date of any other month as well.

“The Congress party is trying to delay the new tax, but you must remember, it is a transactional tax and not an income tax.

“So, it can come up on the first of any month. Delay from April 1 does not mean that it will go to April 1 of the next year. That only happens in income tax,” Jaitley said here at a press conference on the last day of his four-day visit to Singapore and Hong Kong.

On direct taxes and the pending disputes regarding some foreign companies, including Vodafone, Jaitley said most of the past issues have been resolved either by expeditious judicial adjudication process or by asking expert panels.

“I can’t tell you the exact process that we will follow, but my objective is to have a resolution.”
Promising an easy tax regime, he also dismissed the suggestions that the government has been trying to resolve this issue for a long time, but has not been able to do so.

“For the future, retrospective is over. MAT is over. Transfer pricing has been resolved. It is not that we have been only talking about these things, we have been acting on it,” he said.-PTI