The government is ready to discuss all issues with the opposition to pass a key amendment in the winter session of parliament that would pave the way for a new nationwide goods and services tax (GST), Finance Minister Arun Jaitley said.
The government is not, however, willing to compromise the basic architecture of the GST to get it through parliament, Jaitley told Reuters in an interview on Tuesday during a visit to Dubai.
Jaitley is in the UAE to drum up interest in Asia's third-largest economy.
Jaitley rebuffed Prime Minister Narendra Modi's critics and challenged the opposition to back a crucial tax reform, pledging also to put investments before budget savings to drive growth.
The minister told the UAE-India Economic Forum that the Indian government is ready to address investor concerns.
He said the sovereign wealth fund of the United Arab Emirates should start investing in India soon.
The first investment in India could be into India's national infrastructure fund, Jaitley said in an interview, adding that the government would put legal structures and tax predictability in place to attract sovereign wealth funds.
Asked whether India should make efforts to change the perception of intolerance to reassure investors, he said: "There’s no indication of intolerance at the ground level."
Jaitley also raised the issue of fresh negotiations between officials of India and the UAE for finalising the terms of reference of the new Bilateral Investment Promotion Agreement (BIPA) as the existing BIPA is expiring by December end this year. From January 2016, new BIPA has to come in existence.
His UAE counterpart Sheikh Hamdan Bin Rashid Al Makhtoum assured the finance minister that he will look into all the issues raised by him.
Opposition Challenged
Jaitley brushed aside senior leaders in Modi's ruling party who rebelled after a heavy election defeat this month in Bihar, the country's third most populous state.
"People must have a sense of responsibility when they speak," he said.
The setback in Bihar dealt a blow to Modi's prestige after he campaigned actively in the state, and has emboldened his opponents in parliament who have used their control of the upper house to delay his economic reform agenda.
Jaitley said the Indian government would prefer to use buoyant tax receipts to fund extra infrastructure spending than to slash its borrowing target for the current fiscal year that runs to March 2016.
Achieving "high growth and depleting poverty" are top of the agenda of the government for the coming years, he said. Modi, elected in May 2014 with the strongest mandate in three decades, has set his ambitions to lead India for two five-year terms.
"I would stick to my fiscal deficit target of 3.9 per cent this year and the priority will be to spend whatever resources the government has within the fiscal deficit target," said the 62-year-old Jaitley.
The government is ready to discuss all issues related to the new nationwide goods and services tax, he said.
"Without compromising on the architecture itself, and keeping a general consensus between the states and the centre in mind, I think a discussion is reasonably possible," he said.
Modi has been unable to pass the GST because his coalition lacks a majority in the upper house of parliament, where India's states are represented. One controversy has been over a proposed state levy that some say would make the tax complex to administer.
After the Bihar defeat, his chances of securing control over the chamber in this five-year term have evaporated, compelling him to seek dialogue with the opposition to implement his reform agenda.
(Agencies)
