FM assures US investors of subsidy reforms in oil, other areas

Finance Minister Arun Jaitley on Thursday assured investors in the United States that the government would continue reforming the subsidy regime in the oil sector, and kerosene would be taken up next. Subsequently, other subsidised sectors would be taken up, he said.

"We needed to rationalise our subsidies. We are going to take reforms in kerosene as well, which is the last to be reformed in the oil sector. Hopefully, these experiments do succeed. In some other areas, which are subsidised, this experiment could be considered on a case-to-case basis," Jaitley, who began his nine-day trip to the United States on Wednesday, said.

Earlier, Petroleum Minister Dharmendra Pradhan had said the government was going to start a pilot project on kerosene and this will be done without cutting on kerosene supply for even a single poor family.

The Centre is talking to state governments to have the data digitised and to allocate kerosene to whoever needs it.

The finance minister did no specify which would be the other sectors that would be taken up for subsidy reforms after the oil sector. However, oil, food and fertiliser constitute the major chunk of subsidies in India. Food subsidy is the largest among them. In the Budget for 2015-16, the food subsidy is pegged at Rs 1.15 lakh crore, against Rs 92,000 crore in the revised estimate of the previous year. Similarly, the petroleum subsidy was projected to be Rs 63,426 crore against Rs 85,480 crore and fertiliser one at Rs 7,29,70 crore against Rs 67,971 crore.

He assured the investors that the government has rejected retrospective system of taxation. "Old issues of transfer pricing, retro tax issues, one by one we are sorting out through judicial process, and hopefully in the next few months most of them would be off the table," he said.

On concerns over "renewed tax terrorism" in India, Jaitley said this is a term coined by him and "it is my responsibility to make sure that it does not happen in India again".

Earlier, the finance visited the New York Stock Exchange and told investors while there is "a lot of excitement and a lot of buzz" about India, there are concerns about the pace of reform process and policy stability as well.

He rang the closing bell at NYSE and also toured the trading floor of the world's largest stock exchange.

The minister assured investors that the Centre is prepared for introduction of the Goods and Services Tax (GST) from April one, 2015-16. He said a Rajya Sabha panel would submit its report on the constitution amendment Bill on GST by the second week of July, much ahead of the monsoon session.

The Bill then would be passed in the monsoon session and the remaining three Bills would be passed in that session of the next winter session. He said barring Tamil Nadu, all states are on board for GST.

Jaitley said he is keeping his fingers crossed over the monsoon, but the government's food management is under control.

The finance minister said the country's 7.5 per cent economic growth rate is not its "best potential growth rate" and there is "restlessness" in the government to boost economic growth and set higher GDP targets in the coming years.