Union finance minister Arun Jaitley on Thursday prodded state governments to simplify taxation laws and ensure corruption-free processes for doing business so that they can beat competition among themselves to attract private investments.
“States that ensure that a project is taken to the execution stage at a rapid pace after the signing of an MoU or agreement will attract private investments,” Jaitley said in his inaugural speech at the Resurgent Rajasthan summit – an investor’s conclave jointly organised by the Rajasthan government and the Confederation of Indian Industry (CII). “Ease of doing business is not merely a slogan, but the need of the hour. State governments that are able to ensure clean processes and systems will do well,” Jaitley said.
Speaking in the context of Rajasthan, the minister estimated that approximately 55% of the state government’s expenditure was “tied up”, largely on account of legacy issues.
The state’s financial position was likely to get even tighter after the recommendations of the seventh pay commission are made, he estimated.
“The way forward from here will come through policy reform aimed at expanding incomes through participation from private investments including FDI,” he added.
His comment came hours before the pay panel submitted its recommendations to the government suggesting a 23.5% raise in overall pay from January. Referring to the NDA government’s reforms agenda, Jaitley advocated the need for state governments to enact labour reforms, even as he singled out the Rajasthan government for pioneering such measures.
Saying that the central government’s reforms agenda would benefit the state governments, the finance minister said that one such initiative was to empower the state governments to absolve the debts of the state distribution companies. “Speaking about the “legacy issues” that were restricting the growth trajectory, Jaitley said these were an outcome of the “misgovernance and flawed policies” of the earlier Congress government.