India’s Finance Minister Arun Jaitley promised Friday to make progress during the upcoming parliamentary session on a string of economic reforms, including a national tax to create a single internal market.
The right-wing government led by Prime Minister Narendra Modi was elected in May with the biggest parliamentary mandate in three decades on a pledge to take tough action to revive India’s stumbling economy, AFP reported.
Jaitley has declared the government wants to pass the goods-and-services tax (GST) by next April, one of the reforms cited by economists as key to cutting the cost of doing business and boosting India’s sluggish growth.
Jaitley said he was “almost ready” with the GST proposal to end India’s patchwork of state taxes and confident a constitutional amendment bill to change the tax law will be introduced in the next session starting Monday.
The tax change is one of the most complicated reforms to achieve, requiring a constitutional amendment involving consent of a majority of India’s states – some of which object to ceding their right to levy taxes – as well as approval by both houses.
While the government holds a majority in the lower house, it is still in a minority in the upper house.
But Jaitley said he did not expect legislators to hold back the GST once he wins state approval for the tax change.
“I am quite sure once the state governments across political parties agree, we should be able to push this (GST),” he said.
Jaitley also said the government is aiming for passage of a long-pending insurance bill that involves hiking the foreign direct investment (FDI) cap in the insurance sector to 49 percent from 26 percent.
The higher ceiling is seen as paving the way for billions of dollars to flow into the insurance sector that is starved for funds in the country of 1.2-billion people who are badly under-insured.
“We are on the verge of opening the sector a little more,” Jaitley said in a speech at a conference in New Delhi.
The minister also said he would seek to target India’s massive food and fuel subsidies better to ensure only those in financial need benefited.
India’s subsidy bill increased five-fold under the previous left-leaning Congress government which implemented policies to buy agricultural produce at guaranteed prices and distribute cheap grains to the poor.
Modi’s government has held back from dismantling many populist schemes. But the government last month lifted diesel price controls in a move to reduce India’s energy bill.
