India is set to unveil a slew of reform measures in the coming weeks, including a proposal to amend the land buying rules, and a law to introduce the goods and services tax (GST) for a common national market.
Also on the anvil are plans to pare government’s equity in state-owned banks to 52% and a disinvestment agenda laying down the schedule to sell the Centre’s stake in public sector undertakings (PSUs).
Besides, the government is hopeful that it would be able to get the Insurance Bill passed in Parliament’s Winter Session, which begins on November 24, to raise the foreign direct investment cap in insurance companies from 26% to 49%.
Finance minister Arun Jaitley, tasked with the mandate to steer the economy out of a quarter-century slump, hinted on Sunday that the government was willing to walk the talk on some critical reform measures despite potential political opposition.
“Some changes may be necessary (to the Land Acquisition Act),” Jaitley said at a seminar organised by the IISS and Observer Research Foundation.
“We will first try to reach a consensus and if that is not possible we will go ahead and take the decision,” he said.
Many analysts have cited highly-restrictive conditions in the land acquisition legislation that the UPA government enacted last year as a major barrier for the industry to buy land.
Time and cost overruns have been a major bane for India’s infrastructure projects. Many large proposals are stymied by ambiguous titles of ownership, environmental issues, poor compensation and social concerns.
Jaitley also indicated that the plans to introduce GST, India’s biggest tax reform initiative, has entered the final leg with the Centre holding final round of negotiations with the states to iron out the thorny issues.
If adopted, GST can alter tax administration by giving a one-shot solution by subsuming a string of central and local levies such as excise, value-added tax and octroi into a single unified tax and stitching together a common national market.
The Centre is planning to introduce the Constitution Amendment Bill in the Winter Session of Parliament, which will likely lay out the roadmap for the system’s rollout.
GST’s implementation has faced political hurdles as state governments fear it could rob them of fiscal powers.
“Economy was and is in a challenging situation and one of the principal challenges before us is to restore the confidence, to expand economic activity and move towards increasing the growth rate,” he said.
In September, the government had approved share-sale plans in three major state-owned companies —Coal India Ltd, NHPC and ONGC — that can earn the exchequer Rs 44,000 crore.
Revenues from selling shares in PSUs is critical to the government’s plans to keep the fiscal deficit — the amount of money the government borrows to fund its expenses — at 4.1% of GDP in 2014-15.
Over the last five months, the Narendra Modi-led government has unveiled string of measures including lifting of state controls on pricing of diesel, plans to put up coal mines for bidding and as also a signature initiative ‘Make in India’ to turn India into a manufacturing powerhouse, remove bureaucratic sloth, make the country more investor-friendly and aid its economic recovery.