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BJP plays safe on retail FDI

New Delhi, March 31: If elected to power at the Centre, the BJP’s priority will be to restore the investment cycle in the country, create a congenial ambience for foreign investors, clear projects in time and not discriminate against states that are investment-friendly.

Unveiling the party’s economic agenda in broad terms to a group of foreign correspondents here today, the BJP’s Rajya Sabha Opposition leader and now Amritsar candidate, Arun Jaitley, was quoted as saying that the UPA had “completely marred” the investment cycle and “damaged” investor confidence in the Indian economy.

“India is no longer regarded as an investment destination where there is ease of doing business,” a note from the BJP quoted him as saying. Therefore, the BJP’s first concern would be to generate economic activity and restore the confidence of both domestic and overseas investors.

However, on the issue of foreign direct investments, Jaitley clarified the BJP’s commitment was “sector-specific” and it was still against FDI in multi-brand retail because India was “still not prepared for it”.

He said the BJP regarded FDI as an “additionality of resource” that would foster economic activity.

On February 27, the BJP’s prime ministerial candidate, Narendra Modi, had adopted a more nuanced position on the matter as he urged Indian traders to integrate with the “global order”.

At a meeting organised by the Confederation of All India Traders in Delhi, Modi had appeared to leave the post-poll door open for FDI in retail without discarding the BJP’s stated position.

Jaitley rejected retrospective taxation and stressed that the “stability of tax regime has to be maintained”.

“On retrospective taxation, I clarified that the imposition of retrospective taxation during the UPA regime was a defining moment for subverting the investment climate in India,” he said.

He added that retrospective taxation was permissible only when taxes already collected had to be protected. “Taxes that impose fresh liability should not be imposed with retrospective effect.”

Jaitley said the BJP would follow an economic model that generated growth and encouraged entrepreneurship but conceded that growth alone would not lift people out of poverty. “Poverty alleviation schemes are necessary,” he said.

On Sunday, former finance and foreign minister Yashwant Sinha had said that inflation management was on top of the BJP’s economic agenda.

“Otherwise the RBI would not be able to get space for a reduction in interest rates. Even a 25 per cent basis point (quarter percentage point) reduction in the interest rate will have a dramatic impact on the investment climate,” Sinha told the media in the course of a diatribe against finance minister P. Chidambaram.

Outlining the contours of the BJP’s foreign policy, Jaitley said India’s engagement with its neighbours would be based on “security considerations” and with the rest of the world, on “economic considerations”.