CHIEF NE­GO­TIA­TOR

ARUN JAIT­LEY, 65

India Today - - OTHER NEWS MAKER - By Shweta Punj

The main ar­chi­tect of the first ma­jor tax re­form since In­de­pen­dence, the Goods and Ser­vices Tax, has also deftly man­aged the af­ter­math of de­mon­eti­sa­tion

On Novem­ber 29, amidst the heat and dust of Gu­jarat elec­tions, fi­nance min­is­ter Arun Jait­ley re­ceived a call from Prime Min­is­ter Naren­dra Modi on a blog the for­mer had writ­ten on the in­sol­vency law the day be­fore. The blog post—The Fic­tion of Loan Waiver to Cap­i­tal­ists—sought to counter the crit­i­cism that the gov­ern­ment could waive loans of cap­i­tal­ists. The PM was ob­vi­ously in­trigued by the FM’s ar­gu­ments and wanted him to elab­o­rate. Jait­ley, Union min­is­ter for fi­nance and cor­po­rate af­fairs, wears many hats as a BJP leader and a se­nior min­is­ter who has been in charge of key elec­tions, one of the few to be con­sulted on cabi­net reshuf­fles, the only min­is­ter to be given two heavy­weight port­fo­lios (un­til re­cently he han­dled fi­nance and de­fence) and, most im­por­tantly, the man at the fore­front of re­forms that form the cor­ner­stone of the Naren­dra Modi-led gov­ern­ment.

The year 2017 would be re­mem­bered as one of the most sig­nif­i­cant years in In­dia’s eco­nomic his­tory, when the gov­ern­ment in­tro­duced fun­da­men­tal struc­tural changes in the econ­omy and Jait­ley fronted them all. Whether it was ex­pand­ing Aad­haar to other ser­vices, ra­tio­nal­is­ing sub­si­dies to reach tar­geted users, driv­ing con­sen­sus on the Goods and Ser­vices Tax

(GST), man­ag­ing the tail­winds of de­mon­eti­sa­tion, or powering the $32.43 bil­lion bank re­cap­i­tal­i­sa­tion plan, there have been no easy days for Jait­ley in 2017. There are sev­eral opin­ions on what he could have done better in the year, but many econ­o­mists con­cur that he didn’t do any­thing ‘wrong’.

His col­leagues in the fi­nance min­istry cite his abil­ity to work with bu­reau­crats and to al­ways look at the big pic­ture. While his pre­de­ces­sor P. Chi­dambaram was con­sid­ered ‘very sharp’, he got too caught up with the nitty gritty and made bu­reau­crats overly cau­tious. As a lawyer, Jait­ley’s ne­go­ti­a­tion skills are all too well known. In De­cem­ber 2017, while ne­go­ti­at­ing the GST with the em­pow­ered com­mit­tee of state fi­nance min­is­ters, he fol­lowed a give-and-take strat­egy—a key of­fi­cial present at the meet­ing told in­dia today that Jait­ley at no point de­vi­ated from the non-ne­go­tiables, but at the same time was open to find­ing a way out. There was im­mense pres­sure on him from the states to keep pe­tro­leum and pe­tro­leum prod­ucts out of GST but, ul­ti­mately, Jait­ley con­vinced the states to in­clude these in the GST; though he left it to the GST Coun­cil to de­cide the date of in­clu­sion. But he did push through In­dia’s sin­gle­most im­por­tant tax re­form since In­de­pen­dence, bring­ing the coun­try un­der a uni­fied tax regime, even if its im­ple­men­ta­tion left much to be de­sired.

Pol­i­tics apart, Jait­ley had the ben­e­fit of fall­ing oil prices re­duc­ing the oil sub­sidy bill; this helped In­dia’s macro-eco­nomic in­di­ca­tors such as in­fla­tion, cur­rent ac­count deficit and trade bal­ance. But Jait­ley was also at the helm of a slow­ing econ­omy—five quar­ters of slow­ing growth, even as re­tail in­fla­tion soared to a 15-month high of 4.88 per cent in Novem­ber.

“I think if we look back, this year there are sev­eral im­por­tant struc­tural changes that got ini­ti­ated or im­ple­mented. In GST, two more chal­lenges re­main—pro­ce­dural sim­pli­fi­ca­tion and dou­ble check­ing to en­sure that eva­sion doesn’t take place,” Jait­ley told in­dia today (see in­ter­view), re­flect­ing on the year gone by. Of course, his work has be­come only more chal­leng­ing. The next step is to en­sure the smooth im­ple­men­ta­tion of the in­sol­vency code, iron­ing out fur­ther wrin­kles in GST, tak­ing the bank re­cap­i­tal­i­sa­tion process to its log­i­cal con­clu­sion and mak­ing In­dia grow.

At no point did Jait­ley de­vi­ate from the non­nego­tiables, but was open to find­ing a way out on GST

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