On recapitalisation of PSBs: Recapitalisation of state-owned banks will be performance-linked. Am announcement regarding this will be made soon. There will be one or two instances of consolidation in state-owned banks over the next twelve months, or a year. State-owned banks are to be encouraged to use capital to lend to the micro, small and medium enterprises (MSMEs). There needs to be a concerted policy to direct loans to MSMEs in the near future.
On GST: The committee system has helped to build consensus. Rates will continue to decline over the next two years. There has been a 40 per cent (3.5 million assessees) increase in the number of assessees over the old system. Net tax revenue has exceeded pre-GST levels. The E-way bill will be cleared in Karnataka next quarter and other states will follow suit.
On private capex: Investments have been slow because of surplus capacity but a better global economy, coupled with bank recapitalisation and FDI and public investments should help improve private capex.
On interest rates: While every government wishes for lower interest rates, the final call is with the central bank.
On divestments: Power and oil companies to remain public sector companies. A mix of privatisation (AIR India and Dredging Corp) and divestments to be used to raise resources.
On future policy impetus:
There are two areas of focus—
i) to build rural India (housing, roads, electrification, sanitation, education and health)
ii) to build national infrastructure.
On ease of doing business: Two areas need immediate attention—
i) Enforcement of contracts – law department to present changes in contract law in the coming session of the Parliament
ii) Permission of land and buildings – The Department of Industrial Policy & Promotion (DIPP) is working with state governments to make land and building permits available online.
On farm loan waivers: Absolutely no central support on such waivers.
On land and labour reforms: States to pursue land reforms, while the Centre will be working on the consolidation of labour laws.
On politics: Lack of majority in the upper house of the Parliament is a poor alibi for lack of legislative reform. Most economic reforms need to legislation change.
Jaitley’s two-day visit to the island country in Southeast Asia is slated to come to an end on Thursday. He will be returning to New Delhi later this evening.