With GDP numbers showing an uptick, Finance Minister Arun Jaitley today said the economy is turning around, investor confidence is improving and inflation is moderating as a result of the recent government decisions to relax FDI norms and push manufacturing.
The manufacturing curve has turned, services sector is looking up and inflation has by and large moderated, he said, while addressing his first press conference to mark 100 days of the NDA government in office.
"In the first quarter (April-June), a 5.7 per cent growth rate is encouraging. With the long-term impact of all the new initiatives setting in, I am sure the impact in the coming quarters will be much larger," he said.
The GDP growth at 5.7 per cent in the first quarter of the current fiscal is highest in nearly two-and-half years.
Listing decisions taken in first three months in office, Jaitley said FDI restrictions in defence and railways have been eased, decision making hastened, special mechanism created to resolve tax dispute and steps taken to increase investment in manufacturing and infrastructure.
"The new government was clear about the direction in which it was to move. We wanted to expand economic activity, hasten decision making, easing doing business in country, open up significant sectors, expedite decision making, while maintaining the social sector expenditures in most areas," he added.
On future agenda, the Minister said the government would soon roll out disinvestment plan, push Goods and Services Tax (GST) and try to get the insurance bill through in the ensuing Winter Session of Parliament.
Observing that the Lok Sabha election results itself changed the mood, Jaitley said, it was "after 30 years you had a single party majority in Parliament and therefore decision making, including economic decision making, became easier."
Unlike the previous UPA government, he said there were no internal issues and all steps taken by the Finance Ministry had the support of the Prime Minister and his office.
The NDA government, Jaitley said, tried to address the grievance of the investors with regard to taxation issues and clarified that there would be no space for retrospective legislations on taxes.
"We created a new mechanism for an advance ruling (by making it) available even to domestic investors above a threshold. We created a special mechanism for resolution of tax disputes. The scope for discretions in transfer pricing was narrowed down," he said.
In order to boost economy, he said, the government further opened the defence and railways for foreign investment and eased the norms for real estate.
As regards raising FDI limit in insurance from 26 per cent to 49 per cent, he said, "we took a firm decision on insurance. I do hope, that the insurance amendments will be passed in the next session of Parliament."
The Minister hoped that the Select Committee, set up by Parliament to scrutinise the insurance bill, would soon start work. "I am hopeful of its passage in the next session.
A significant amount of investment is just waiting in that sector to come in," he added.
Referring to initiatives taken by the government in the infrastructure, manufacturing, the SME sector and real estate sectors, he said, "I think the long term impact of all these decisions would gradually be felt. And if you look at the impact today, in investment mood there is sea change. The international investors are looking at us with great curiosity and I am sure we will see the impact of this."
