Finance minister Arun Jaitley on Thursday said blamed the UPA government’s adversarial tax policies for hurting India’s image as an investment destination.
The controversial retrospective tax — introduced in 2012 that imposed taxes on older corporate deals including Vodafone’s acquisition of Hutch in India in 2007 — decelerating an already slowing economy. This has left the new NDA government with the responsibility of turning around the economy along with changing tax laws.
“The retrospective tax sent a very negative signal and investments dried up... I hoped that the UPA untied the knot before they went but the UPA left it and it is a difficult knot to untie,” he said, while replying to the discussion on the budget in the Rajya Sabha.
There were signs of revival but it was too early to draw a trend, he added. Factory output grew 4.7% in May after two successive months of contraction, rekindling hopes of a rebound.
He reiterated the government’s pro-business stand, which he said would boost revenue collection necessary for the social sector. “I want to make a candid confession, if you say we are pro business, I have no hesitation in saying that we are pro business... but does it help the middle-income group...the answer is that it does...does it help the poor class, it does,” he said. “Profit is no more a bad word. Unless there is profit, there will not be taxes and the government needs revenue for strengthening social infrastructure and poverty alleviation.”
“The last two financial years have seen a sub 5% growth rate ...when you have a sub 5% growth rate, the spiral consequences are serious,” he added.
Jaitley said the discussion on the finance bill will be taken up in the Lok Sabha on Friday.