JOIN USCiting slowdown in China, Finance Minister Arun Jaitley today said India has a chance to become a global manufacturing hub but regretted that Congress was not allowing GST rollout which alone could push GDP by 1 to 2 per cent.
The minister said in Lok Sabha that India can see 8 per cent growth as the government is taking a host of steps to boost investment besides reviving stalled projects and pumping in more funds into PSU banks. In addition, "rain Gods have been kinder this year which is expected result in a good harvest," he said.
Jaitley, who was replying to a debate on Supplementary Demand for Grants amid a boycott by Congress and a number of other opposition parties, said the government will infuse Rs 70,000 crore in PSU banks in the four years and they will raise another Rs 1.10 lakh crore from the market, making them healthier to finance economic growth.
"If my friends (Congress), who are not present in House today, allow implementation of GST, which was introduced by Congress, you will have an uniform tax rate, one market and it is capable of boosting economy by 1-2 per cent.
"In adverse situation we can touch 8 per cent if banks are recapitalised, GST implemented, stalled projects revived and infrastructure spending improves," he said.
The GST bill, which proposes to usher in a uniform indirect taxation system throughout the country, is stuck in Rajya Sabha which is unable to function because of opposition protests over various issues.
Turning to China, which has been the world's fastest growing economy, Jaitley said it has slowed down and its wage bills have gone up, pushing up the cost of its products.
In this context, Jaitley said, "It is for us to become a manufacturing hub. It is then the Indian economy will achieve full potential".
The Finance Minister said India, which is targeting to grow by over 8 per cent in a sustained manner, is a "bright spot" among the global economies.
India grew at 7.3 per cent last year and RBI has projected this year's growth to be 7.6 per cent.
"In this global environment where global winds are not favourable .. In past few years, we have come down to reasonably bottom pit... Under Prime Minister Narendra Modi's leadership, we are reviving the economy and it is responsibility of all of us to cooperate to enhance growth rate," Jaitley said.
He said global economies are facing challenges and even for a high growth economy like China, the new normal is 7 per cent or below.
"This year we are targeting to touch a growth of about 8 per cent. Obviously when we grow by a larger growth rate, a revenue buoyancy also comes in. The first few months of the current year appear to be giving some green shoots, and one of those green shoots is in the area of indirect revenue," Jaitley said.
While talking about the woes of banking sector, he said steel, power and highways sectors account for maximum non-performing assets.
"We inherited an economy where NPA of banks was 6 per cent. There were stressed assets of another 6 per cent. And in those stressed assets there may be some hidden NPA. So we have decided to racapitalise the banks. The government has decided to use tax payers' money, put it in banking system," he said.
He said when banks become healthy with initial capital coming in, they would be in a position to take the burden of financing the growth of the Indian economy.
External factors are also reasonable with a record foreign exchange reserve, 49 per cent increase in FDI in first few months of the year and an under-control CAD, he said. "Therefore we are in a position in spend a lot more money in social sector schemes," he said.
In the first quarter, capital expenditure itself rose by about 17.6 per cent and investment on infrastructure this year is going to be a Rs 70,000 crore more.
Taking a dig at the previous UPA government, he said the last three years of the Congress-led rule saw a very interesting accounting system with high allocation in budget and hefty cuts implemented later in the year such that the revised estimates are much lower.
He said this year, the government is trying to ensure that there is no difference between budget estimates and revised estimates. The RE would be little superior than Budget estimates, he said.
Regretting that opposition benches were not present in the House at the time of discussion, Jaitley said "I do hope that an environment will be created by our colleagues so that a discussion can happen on various topic".
"If some colleagues who are not present today allow me to implement GST, consuming states will benefit. Odisha as also the entire Eastern region will be the beneficiary," he said.
Referring to flood situation in some states, he said "we are keeping fingers crossed". He said the there was a need to spend a lot on irrigation and under the Prime Minister's irrigation programme Rs 50,000 crore have been earmarked.
Jaitley further said that when India grows between 8-9 per cent, the revenues would also be passed on to the states. "We would certainly not be discriminating as far as any state is concerned," he said.