New Delhi, Jul 18 (PTI) : Finance Minister Arun Jaitley said Friday the government has no qualms about being pro-business, and spelt out a roadmap for economic recovery by bringing civility in tax regime, maintaining low rates, rationalising subsidy system and boosting infrastructure and housing.
Replying to the general debate on the Budget for 2014-15 in Lok Sabha, he asserted that being pro-business was necessary for generating more revenues and increasing spending that would benefit the poor and marginalised sections of the society through social sector programmes.
He blamed the “policy paralysis” and retro tax amendment of the previous regime for the current economic woes and promised to take a series of steps besides the budgetary provisions for sustainable growth amid indications of some recovery.
The first stage consideration of the Budget was completed on Friday with the Lok Sabha approving it. Now, the second stage consideration will involve discussion on demands for grants followed by the approval of the Finance Bill.
Justifying the provisions in the Budget aimed at attracting private investments, including foreign direct investment in various sectors such as defence and insurance, the Finance Minister said these were necessary to boost industry and manufacturing within the country that would lead to job creation.
The government is trying to restore confidence of domestic and foreign investors by bringing “civility” in taxation system and remove the perception of “tax terrorism”, he said.
Jaitley said he preferred low taxes to encourage economic activity. “If you put higher taxes on products, people will buy products from outside. Lower taxes will increase economic activities,” he said.
He noted that investors over the last few years had developed “doubts” over the India story in the backdrop of unpredictable tax regime. ”There are a series of steps that we have to take. The budget was only some of those steps. It was directional. It only shows direction. There will be many steps which will be taken outside the budget. It is not necessary that everything is announced in the budget,” he said.
Jaitley also expressed the hope that interest will soften with moderation in inflation. “Interest rates have gone up because inflation is high. I hope interest rate comes down (with decline in inflation)”, he added. He said there has been a marginal improvement in various economic parameters like exports, capital inflows and industrial sector as per the recent data.
This, he said, could not be termed as a “trend” but early signs of recovery. Modest improvement in growth rate is likely in the current fiscal, he said, adding an increase in economic expansion of 7-8 per cent and subsequent buoyancy in tax collection would be help him allocate more resources for social sector schemes.
During the course of his reply, Jaitley announced Rs 2,000 crore special fund under National Bank for Agriculture & Rural Development (Nabard) for food parks, Rs 50 crore for setting up of drug de-addiction centres in Punjab and restoring accelerated depreciation to encourage wind energy sector.
He also promised more funds for resettlement of Kashmiri Pandits over and above Rs 500 crore earmarked in the budget.
Referring to the housing sector, the Minister said he would endeavour to bring about a situation wherein buying a house would be cheaper than taking one on rent.
In his budget, Jaitley raised the tax exemption on home loan repayment from Rs 1.5 lakh to Rs 2 lakh per annum. Following the initiatives taken by the government, Reserve Bank of India too had provided incentives to banks to extend loans to affordable housing at cheaper rates.
On the subsidy policy, the Minister felt it was lopsided as even well off people avail of it through schemes like education scholarship and oil, putting more burden on the exchequer.
”We have reached a situation where subsidy burden is too high...subsidies at times can become unquantifiable amount given to unidentified people. It is this situation which we need to correct,” he said.