Finance Minister Arun Jaitley said on Wednesday he still wants to implement a new goods and services tax (GST) by next April 1, although the opposition Congress party could delay its passage through the legislature.
Addressing a business conference, Jaitley said it was important to stay on the path of reform and build momentum to achieve higher economic growth. The current global economic situation presented an opportunity for India, he said.
The GST, which economists estimate could add 2 percentage points to India’s gross domestic product, has failed to clear parliament due to a blockade of the upper house by the Congress party.
Jaitley said the composition of the upper house – which represents India’s states – would change next April, suggesting that the balance of power would tilt in favour of the government.
Asked whether bad loans and banking were the main worry for the economy, he said: “The banking system is a matter of concern – it is not the main worry, there are no grounds for panic.”
Jaitley, who was speaking at an Economist conference, highlighted steel, power, electricity distribution companies, and to a lesser extent textiles and highways as the main sectors under stress.
India is seeking to resolve pending tax disputes with investors and hopes to resolve “legacy” issues in short order, Jaitley said.
Jaitley was speaking after the finance ministry decided last week not to press claims for a Minimum Alternate Tax (MAT) against foreign portfolio investors. India remains locked in major back-tax disputes with telecoms group Vodafone and Cairn Energy.
Without referring to individual disputes, Jaitley said the government was trying to resolve pending tax disputes, many of them outside the courts, and said that these legacy issues would be resolved “in not much time”.