We Know How To Bite The Bullet On Tough Choices: Jaitley’s Defence In Lok Sabha
Jaitley defends the government’s reforms over the last four years.
Finance Minister Arun Jaitley today defended the NDA government's reforms saying that it has the courage to take unpopular decisions even when there is strong opposition to it.
"Demonetisation, the Goods and Services Tax and the Insolvency and Bankruptcy code; these were all difficult decisions," Jaitley told the Lok Sabha during the Budget session of Parliament. "And that’s the difference between UPA and this government. We know how to bite the bullet when decisions have to be taken," he said.
The finance minister was responding to criticism from the Congress party about its proposals in Union Budget 2018 and the state of the economy. Jaitley said that structural reforms may be painful in the short run but have huge benefits in the medium to long term.
Structural reforms may be of momentary difficulty but in the long run they bring huge dividends to the economy.Arun Jaitley, Finance Minister
He added that early indicators like core sector growth, investments, demand and the PMI data are all showing green shoots of recovery.
Jaitley lamented the Congress' “campaign” against the rollout of GST, adding that countries around the globe have taken years to stabilise their indirect tax regimes. "It is to the credit of the Central and each one of the states that in India GST was stabilised in a matter of months".
He also defended the timing of the rollout saying that the Constitutional amendment for enabling the new tax regime had necessitated its implementation by July.
According to the amendment, service tax, value added tax and excise duty had to be phased out by Sept. 16, 2017, after which all would have been unlawful, Jaitley said. And yet, the Congress party was suggesting a "complete charter for anarchy" by calling for the postponement in its rollout, the finance minister added.
Postponement of GST would’ve meant that the Centre and state governments would’ve lost their right to collect the older taxes even before the new tax has been approved and put in place. There would’ve been an Indian state without taxation.Arun Jaitley, Finance Minister
He also justified the government's decision to demonetise high value currency notes in November 2016. Jaitley said that even with two big reforms like GST and demonetisation, the net impact on growth was only of 40 basis points. But it had implications like faster adoption of digitisation, curbing tax evasion and increasing the personal income tax base, he said. GST too had a one-quarter impact due to destocking, when growth fell to a three year low, but is now back on track, he added.
On government missing its fiscal deficit target this year, Jaitley said that it was largely a statistical impact of GST revenue for a particular month coming in the next one. Hence, the government had to work with eleven months of revenue, he reiterated. "When we came into power, fiscal deficit was 4.5 percent. Each year we've gradually brought it down and we'll keep doing so".
Jaitley also acknowledged the need to spur agricultural income, alleviate poverty and create more jobs. But, he added that these are long standing problems that India has faced and not something that have just arisen during Modi's administration.