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