Finance Minister Arun Jaitley said on Thursday that economic reforms in the legislative pipeline can push India’s growth rate above the 7 to 7.5 percent range.
India’s economy, Asia’s third largest, is expected to grow 7.5 percent this year, according to the latest World Bank forecast, which would make it the world’s fastest growing economy. The government forecasts growth of 8.1-8.5 percent while the central bank has a 7.6 percent gross domestic product growth target.
“Neither the government, nor the people, nor the industry whose representatives, some of whom are here, nobody is very excited about a 7-7.5 percent growth rate in India,” Jaitley said during a discussion with Timothy Geithner, president of investment firm Warburg Pincus and a former U.S. Treasury Secretary.
“Because a series of reform fixes which are in the pipeline and are to be implemented, we have now identified all the problem areas, and I think one by one as we go resolving most of them, hopefully we should reach what our destination targets are,” he said.
Prime Minister Narendra Modi, one year in power, has sparked optimism that he can implement economic reforms and alleviate bureaucratic overload in India that is seen as a hindrance to attracting foreign investment and ultimately stronger economic growth.
Jaitley took questions about the ability of India’s government to push through and more importantly implement economic reforms to speed up infrastructure spending and streamline tax policies. He acknowledged the bottlenecks in both areas but said the government was making progress.
Modi has pledged to overhaul the nation’s tax regime. However the pro-business government was caught flat-footed in a row with foreign portfolio investors over demands they pay the minimum alternate tax, for which they had not previously been liable.
Jaitley has said previously he hoped that the upper house of parliament would “soon” pass an enabling amendment that would make it possible to implement on time a new goods and services tax (GST) that would unify India into a common market.
The bill on the GST has been referred to a committee for discussion and Jaitley said there is a current majority among the committee in favour of the legislation.
Jaitley said he was focussed on implementing the tax measure by April 1, 2016, the start of the new fiscal year.
“This reference to the committee has actually shortened the window of time available to me. I now have to run faster to in order to catch up. If nothing unusual happens, hopefully I make it. So I am conscious of the time constraint,” he said.