In­dia has po­ten­tial to grow faster at 9 per­cent, says Jait­ley

The Pak Banker - - MARKETS/SPORTS -

In­dian Fi­nance Min­is­ter Arun Jait­ley has stressed that struc­tural re­forms ad­dress­ing in­fra­struc­ture, ir­ri­ga­tion, farm pro­duc­tiv­ity and man­u­fac­tur­ing can help boost growth by about 1-1.5 per­cent­age points.

In­dia has the po­ten­tial to grow at be­tween eight and nine per cent, Mr. Jaitely said while ad­dress­ing del­e­gates at a global busi­ness sum­mit.

A higher eco­nomic growth can end poverty and with the ben­e­fit of the slump in global oil and com­mod­ity prices and good mon­soons, which hope­fully are bet­ter than the last two years, the tar­get will not be very dif­fi­cult or im­pos­si­ble for In­dia to achieve. The up­com­ing Bud­get will not re­sort to "pop­ulism" and will fo­cus on struc­tural re­forms, he said. "The Bud­get has to weigh the ar­eas of weak­nesses where in­vest­ments are re­quired… there­fore, I have to pitch in that di­rec­tion," Mr. Jait­ley said.

"At the end of the day, what is it that you are ask­ing for is to get that cut­ting edge that you must grow at 1-1.5 per cent faster than what you are do­ing to­day… We all know that our po­ten­tial is right there."

In­dia is one of the few economies in the world that sur­vived crises in 2001, 2008 and 2015 and, "when a coun­try grows over 7.5 per cent, we stand out and we feel happy about this...how­ever, he also said that 7 per cent growth isn't In­dia's op­ti­mum growth rate…we have a lot go­ing for us... we should be able to achieve eight per cent growth." The global sit­u­a­tion, he said, is an op­por­tu­nity for In­dia to grow at a bet­ter pace.

"If we show we have the ap­petite for re­forms, the in­vest­ments will flow in." the fi­nance min­is­ter said. Economies the world over are do­ing badly be­cause of the plum­met­ing oil and com­mod­ity prices but the slump "suits us be­cause we are net buy­ers of th­ese" and it is an ad­van­tage that can help the govern­ment in its ef­forts to "put our house in or­der". Though econ­o­mists, in­dus­try and other ex­perts are sharply di­vided on their views on whether a de­vi­a­tion from the govern­ment's com­mit­ted path of fis­cal con­sol­i­da­tion will ben­e­fit the econ­omy, the de­ci­sion must also fac­tor in the tax buoy­ancy and the avail­able re­sources, he said.

Re­spond­ing to a ques­tion on Prime Min­is­ter Naren­dra Modi's re­marks on Fri­day about the dif­fer­ence in at­ti­tudes of ex­perts to­wards sub­si­dies aimed at the poor and the tax sops for the cor­po­rate sec­tor, the fi­nance min­is­ter clar­i­fied that the coun­try needs both a strong cor­po­rate as well as a sound agri­cul­ture sec­tor. "In­dia needs sound poli­cies to help both th­ese sec­tors and not put them in con­flict with each other."

"The govern­ment is for ra­tio­nal­i­sa­tion of sub­si­dies, not for its abo­li­tion. It is not against sub­si­dies, but will fo­cus on tar­geted sub­si­dies. Sub­si­dies must be en­ti­tled to peo­ple who need them," he said.

He also ex­pressed hope that the Congress will "see rea­son" and help the govern­ment pass, in the Bud­get Ses­sion of the Par­lia­ment be­gin­ning next month, the con­sti­tu­tion amend­ment bill meant for the roll out of the Goods and Ser­vices Tax (GST) Bill. He said he had reached out to the Congress and can't see why it should have a re­think on the Bill be­ing the au­thor of the re­form in the first place.

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