New York: India has the potential to grow at 8-9 percent or even more in the next one to two years and global investors cannot ignore such an economy, Finance Minister Arun Jaitley said on Friday while blaming policy instability for deterring investment in the past.
Jaitley, responding to questions at a talk organised here by the Columbia Business School during his last day in the city, said there is certainly an improvement as far the investment in India is concerned.
He said Foreign Direct Investment last year grew by 39 percent and the break-up between FDI and Foreign Institutional Investor (FII) is "almost equal".
Pointing out that the Foreign Investment Promotion Board received almost 350 requests in one year, which is almost one per day, Jaitley said he is "sure" this will continue to increase.
"As I visualise, an economy which comprises of a huge market, with a lot of trained human minds and a potential to grow at 8-9 percent, may be somewhat more in the next one or two years, that is an economy which the global investors can't really ignore," he said.
Jaitley, who left for Washington DC after the talk, said global investment into India was deterred in the past due to "instability of policy, particularly taxation policy."
"What investors always look for is that the policy would either be stable or improve. They don't want it to move backwards," he said adding that in terms of taxation, "we didn't do ourselves a favour by adopting an approach which was not sustainable."
Jaitley informed the audience of students, academicians, business chiefs and analysts that the direct corporate tax rate will be brought down to 25 percent over the next few years.
On the Goods and Services Tax (GST), he said he is targeting to bring the tax regime into effect by April 1, 2016.
Terming GST as an idea that has been accepted by the states and country for its "obvious advantages", Jaitley said, "I don't think GST can be defered much more in this country... the only sadistic pleasure that somebody can get out of delaying it is whether it is April 1, 2016, or April 1, 2017. But that sadistic pleasure will be at the cost of the Indian economy.".
He urged the opposition to cooperate in the exercise.
Jaitley said retrospection taxation was an issue that he got on his table "unresolved".
The Narendra Modi government has made it clear that it would "never use the power of enacting retrospectively." The pending cases of retrospective taxation are being resolved through the judicial process, he said.
Jaitley assured that there is "no difficulty as far as the future is concerned but the past legacy continues to haunt us." On transfer pricing also there has been a considerable headway, he said.
Jaitley said the challenge of easing up processes of doing business in India has been important.
"I must concede that we have had not a very glorious history in that regard...I have said that I have never seen a contradiction between being pro-business and pro-poor. It is not a choice between two alternatives," he said adding that reforms must be accompanied with prudent politics.
"Easing business processes is extremely necessary so legislation by legislation, executive step by executive what all can be pruned out is being pruned. I don't think we have achieved the best situation even now. Work is still in progress as far as this area is concerned," he said.
On the Land Bill, Jaitley said it is a very important piece of legislation not merely because the industry needs land.
"The Land Bill is necessary in the interest of India's rural areas" as one needs land for rural infrastructure, irrigation and affordable housing, he said.
On the issue of allocation of coal, he said the Supreme Court decided to quash the arbitrary allotment of coal mine in the month of September.
Former Prime Minister Manmohan Singh had first announced in June 2004 a decision that coal mines should be allocated by a non-discriminatory, non-discretionary process.
"Ten years he could not implement it. What happened smacked of nepotism," he said.
Jaitley said currently he is working on a comprehensive crop insurance programme and on the healthcare of senior citizens below a certain income level.
A day earlier business advocacy organisation US-India Business Council (USIBC) hosted a reception in honour of Jaitley here.
At the reception, President and CEO of MasterCard and Chairman of USIBC Ajay Banga and USIBC President Mukesh Aghi along with senior executives of the business community expressed deep optimism in the US-India bilateral economic relationship.
Lauding the achievements of Modi's first year in office, they provided joint recommendations for furthering cooperation between India and the US, according to a USIBC statement.
It said in one year, Modi and his government have begun to get India on the front foot with lower inflation, a reduced deficit and higher levels of foreign direct investment.
"Reforms once thought to be insurmountable are now on the table," the statement said adding that going forward, USIBC members want to help India meet its growth targets by creating jobs, boost manufacturing, build up infrastructure and generate tourism.
"What investors need in return is continued clarity of the rules of the road - especially in areas like taxation, intellectual property, and improved ease of doing business," Banga said.
Aghi said trade between India and the US currently stands at a little more than USD 100 billion and there is potential to do much more in the US-India bilateral trade relations to ensure that this number grows five-fold.
He said the Council and its membership eagerly await the passage of critical legislations in the areas of taxation and the Land Acquisition Bill.
"We look forward to working with PM Modi, Finance Minister Jaitley and the Cabinet to add to the achievements from the first year," Aghi said.
Parag Saxena, founding general partner and CEO of New Silk Route Partners, said, "My hope is that India will accelerate to double digit GDP growth rate."
"The Prime Minister's promise of simplifying business and taxation, when achieved, will lead to significant investment flows. Within infrastructure, the focus has been rightly placed on both hard infrastructure and soft infrastructure, as well as scoping out financing mechanisms for both," Saxena said.
"The recent commissioning of Azure Power's 100 MW solar projects, the largest under the National Solar Mission, in record time is an excellent testament to improvements in the regulatory environment and ease of doing business in India. We look forward to furthering our contribution to the Honorable Prime Minister's commitment towards clean and green energy and Make in India initiative," said Inderpreet Wadhwa, founder and chief executive officer of Azure Power.
"Amway is proud of its INR 550 crore investment in manufacturing in support of the Make in India campaign. We are eager to work with Prime Minister Modi and Finance Minister Jaitley in order to promote opportunities for manufacturing and entrepreneurship in India," said Steve Van Andel and Doug DeVos, Chairman and President of Amway.
