 "Vodafone tax issue soured investment climate, says Jaitley")
BJP leader Arun Jaitley has said the UPA government’s legislation on retroactive tax may be difficult to reverse and the Indian government’s tax dispute with London-based Vodafone Group Plc challenging to resolve.
Jatiley, in an interview to a television network, criticised the retroactive tax law. He said the tax law was “one of the most important factors” that “soured” the investment environment in India and hinted a BJP-led government at the Centre may try find a solution which may not be easy.
“I don’t know whether the path can be reversed. You already have a legislation which has been brought in by the UPA government. But, ordinarily you don’t create retrospective legislation in order to create new liabilities. You don’t do that…it can be a good guide for the future,” Jaitley told his interviewer Karan Thapar on the programme Devil’s Advocate telecasted on Sunday.
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In this, Jaitley, a noted lawyer, disagreed with senior party leader Jaswant Singh. Last week, Singh said the party will aim to resolve tax disputes with Vodafone Group Plc and Cairn Energy Plc if it comes to power at the Centre. Singh said a BJP-led government may change the retroactive tax law as it has deterred foreign investment. Singh was finance minister during the NDA regime.
In the interview, Jaitley said he didn’t favour the retroactive tax law but wasn’t sure how the situation can be rectified. “How challenging it is to correct what’s happened in the past is quite difficult and this is some of the backlog that the UPA is going to leave behind . I don’t know how easy it is going to be to tackle those issues , ” said Jatiley, who handled the commerce and industries portfolio in the NDA regime.
“One of the various reasons I feel the investment environment in India got soured , I think , this was one of the important factors , ” said Jaitley, a renowned lawyer, who many in his party believe could be the finance minister in a Narendra Modi-led government at the Centre.
The BJP leader dismissed suggestions that his party has had a rethink on its opposition to FDI in multi-brand retail. He said BJP had “genuine concerns against FDI in retail” which are unlikely to change in the near future. “I don’t know what happens if we do manufacturing sector reforms, low cost products are available…no policy is a policy for the next hundred years but as far as the present is concerned I think it is quite unlikely that it will be changed,” said he.
Jaitley, when asked about the fate of the Reserve Bank of India governor Raghuram Rajan if there was a change of government at the Centre post the Lok Sabha elections, said he didn’t want to comment on individuals but significantly said that “if somebody is doing a good job they will continue, but I don’t know”.
The BJP MP said a political change at the Centre will be a confidence building measure for both foreign and Indian investors. He said the next government will need to take a series of steps which have to be business friendly. “Your overall perspective will be that you have to work for enlarged economic activity. You have to facilitate the ease of doing business in India. Your policies will have to be in that direction,” said he.
Jaitley criticised the mess the UPA government created in giving environment clearances to projects, and alleged the ministry targeted specific states in delaying their ecological clearances. He said there were projects which had been pending clearance for years and were given the green signal only towards the fag end. “It is too late. That is what stalled the economic activity in the country,” said he.
He said the BJP was unlikely to undertake labour reforms at least in the early stages of its government. Jaitley said the BJP president Rajnath Singh’s overture to the Muslims wasn’t an apology for Gujarat riots of 2002 but definitely an attempt to reach out to the community which was good for India and as also for the party.