New Delhi: Finance Minister Arun Jaitley on Sunday promised a reasonable and rational tax policy, which will not be "ultra-aggressive" with tax payers, to make India a hub of low-cost manufacturing.
He also said the government will amend the tough land acquisition law even if the opposition does not support as it looks to restore confidence in the economy.
At the same time, the Minister expressed hope that the Insurance Bill, seeking to raise foreign direct investment cap in the sector to 49 percent from existing 26 percent, will be passed in the upcoming winter session of Parliament.
Stating that Indian economy is facing challenges, he said: "So, a reasonable and rational tax policy (is needed). It can't be ultra aggressive with the tax payers."
Noting that India is not a high tax country, Jaitley said the tax Department at present is following the principle that those who have to pay tax must pay and those who don't have to pay should not be harassed for non-payment.
"We have realised that one of the greatest challenges we have is the manufacturing sector. The economy had touched a new low and therefore the manufacturing sector is itself is delicately poised in India. We have to eventually try and make India a hub of low-cost manufacturing," he added.
As far as the Land Acquisition Act is concerned, Jaitley said: "Some changes may be necessary. We will first try to reach a consensus and if that is not possible we will go ahead and take the decision."
The Land Acquisition Bill, which was passed during the previous UPA regime with then opposition BJP supporting it, seeks to set a fair compensation for farm land being taken over for industrial projects. But the law has made land acquisition very difficult, slowing projects.
Jaitley said that the "obstacles" to the land laws would have to be first removed in order to implement the concept of smart cities in India.
States too have come out openly against the land law saying it had hurt the process of acquiring land for infrastructure projects.
In Budget 2014-15, Jaitley had proposed an allocation of Rs 7,060 crore for developing 100 'smart cities' in the country.
The Rural Development Ministry has already suggested a number of amendments to the Land Acquisition Act that will water down provisions such as mandatory consent of at least 70 percent locals for acquiring land for PPP projects, and 80 percent for private projects.
Jaitley also said that the government's disinvestment programme will "unfold" in the next couple of days. He added that the government aims to bring down its equity in public sector banks to 52 percent.
"Economy was and is in a challenging situation and one of the principle challenges before us is to restore the confidence in the Indian economy, to expand economic activity and move towards increasing the growth rate," he said.
Stating that growth rate next year will be "a little better", he said if the trend continues, India can be on high growth trajectory soon.
Talking about reforms, Jaitley said some are possible with a consensus and some others are more challenging.
"I have always believed that some reforms are easily possible ... I have clearly prioritised most of them... For next few months we have our plates reasonably full," he said.
On GST he said: "I am in the last stage of my discussions with the states on the eve of Parliament session before introducing the amendments to the GST law in Parliament."
The month-long Winter Session of Parliament is scheduled to commence from November 24.
The GST regime aims at subsuming most of the indirect taxes at the central as well as state level. The UPA government in 2011 introduced a Constitution Amendment Bill in the Lok Sabha to pave the way for introduction of GST.
Clearance of CST compensation arrears has been a bone of contention between Centre and states, as the states still wait for Rs 13,000 crore arrears pending till 2010.
As regards the compensation structure, states have sought a five-year compensation mechanism from the Centre and demanded the same be included in the Constitutional Amendment Bill.
