'I do hope that India is able to retain its growth rate once again and live up to the aspirations of its people because we must not forget that we not only have a large population to service, we have a very young population to service'
Finance Minister Arun Jaitley has said that the government's initiatives like 'Swachh Bharat', Goods and Services Tax (GST) and demonetisation are having desired impact, the latter two resulting in increasing tax compliance and squeezing quantum of cash in the economy.
In his keynote address – via video conference - to the Berkeley India Conference yesterday, Jaitley said that there is public support to the reforms being undertaken by the governments of the day both at the centre and state levels.
"I do hope that India is able to retain its growth rate once again and live up to the aspirations of its people because we must not forget that we not only have a large population to service, we have a very young population to service," he said.
Jaitley is scheduled to arrive in the US tomorrow on nearly a week-long visit to interact with the US corporate world in New York and Boston and attend the annual meeting of International Monetary Fund and World Bank in Washington DC.
With young population there is not only a perception that they are being 'under serviced', but also, they are becoming more and more aspirational, he said.
"Time therefore is running against us," Jaitley said.
In the next one or two decades, if India has to take a challenge for moving into a higher economic group country, "we have to grow at a much faster pace," he said.
Responding to a question, he refuted the impression that transformational initiatives like 'Swachh Bharat', GST and demonetisation have not resulted in any changes on the ground.
"Would you say there are long term benefits and the country would have to wait for those? Or is there any way to mitigate the problem being faced by the country," he was asked.
A more serious analysis, he argued, would show that even within matter of months there is a short term positive impact of all these projects.
While demonetisation and GST are having desired impact in terms of tax compliances and squeezing the quantum of cash in the economy, he said that for the first time, 'Swachh Bharat' campaign has brought to fore the importance of cleanliness.
Before demonetisation, Indian norm was to live with a high cash economy, not paying taxes, "you buy a property, you transact partly in cash, and in business you maintain two sets of accounts," he said.
"How can a country, which aims to be the fastest growing major economy in the world, which aspires to grow from a developing to a developed economy, continue with the normal of this type," he asked.
And therefore, "you need to shake the system" in order to reduce the quantum of cash in India and therefore obviously to make it a more tax complaint society, he observed.
Cash itself involves several challenges. It leads to corruption and several other problems, he added.
"Let's see for even those why say that there is no short- term advantage, has the number of tax payers in India immediately increased in the matter of months? The truth is, it has. Has the digitisation transaction increased from Rs 70 crores to Rs 130 crores today, it almost doubled," he said.
In the immediate aftermath of demonetisation, Jaitley said there has been sharp reduction in insurgent and terror activities in states like Jammu & Kashmir and Chhattisgarh.
The terror funding itself has gotten squeezed, he said.
"You are having terrorist incidents (now), but the fact that you were finding 5,000-10,000 stone throwers being provided with money by the terrorist organisations, why is it that in the last 8-10 months it has not happened?" he asked.
Moving on to GST, the minister said this has resulted in creation of a national tax structure.
"In the three months, you have all the check points in states disappeared, you have clear flow of goods and services which has started all over the country," he said.
Jaitley said the GST Council has noted some challenges and it is taking steps to address them.
GST, he said, has been a "reasonable smooth transformation," but there is scope for improvement.
"I think in GST Council we have succeeded in creating India's first federal institution," he said.
The transition, he said, would be a far more successful experience which will plug the holes into India's taxation system.
Responding to questions, Jaitley said the Indian government wants to encourage startups.
"The obvious challenge to the country is to grow and grow fast. It has to grow at a much higher rate than we have been growing in recent history," he said, adding that the benefits of the growth must also reach that section of the population which till date has been the least serviced one.
Observing that conventionally India was a far more difficult place to do business, he said that situation has substantially improved for the better.
Identifying corruption as one of the two stigmas for India, Jaitley said the institutional mechanism to fight corruption has become much stronger.
Asserting that direct taxes have to become "more rational and more reasonable" Jaitley said he has already announced a roadmap to bring down the corporate tax to about 25 per cent and is trying to ensure that India becomes a far more compliance society and also tax assessment is more technology driven rather than human interaction.
PTI