India has launched "game-changing" reforms: Jayant Sinha

New York: Allaying concerns of investors over pace of reforms in India, Minister of State for Finance Jayant Sinha Tuesday said the government has implemented "game- changing" measures to transform India's economic fortunes and improve the business environment in the country.

Addressing students and faculty at an India Conference organised by Cornell University here, Sinha listed initiatives such as universal social security, 'Make in India' and agriculture credit taken by the Narendra Modi government to boost productivity and economic growth in the country.

"These measures are game-changing and are really going to transform India's economic fortunes," he said in his address via video link.

Sinha said there was expectation that "big-bang" reforms would be put in place to fundamentally transform the economic landscape and there is disappointment in some quarters over the speed of such reforms.

"I reassure business people, investors and Indians that we have probably done more and more quickly than any other government, including the government that brought in the 1991 liberalisation," he said.

Sinha outlined that to ensure universal social security, the government has initiated the 'Jan Dhan Yojna' which over a period of time will include other benefits like health insurance.

In agriculture, initiatives like the irrigation soil health card, agricultural credit and crop insurance are being put in place to make India's agriculture more productive.

He also listed the Make in India, Skills India and Mudra schemes to highlight efforts by the government to improve manufacturing and give a boost to small entrepreneurs across the country.

When asked about India's low ranking in the ease of doing business index, Sinha said Prime Minister Modi is targeting that India should be in the top 50 and the government is "putting a lot of time and effort" and is "absolutely determined" to improve its ranking among nations in ease of doing business.

"These things take time to address and solve the problems associated with ease of doing business in India," he said, adding that the government is well on track to achieve the target set by Modi to see India among the top 50 destinations on ease of doing business.

He added that the overriding objective of the Modi government is to build India's productive capacity to ensure the country sustains an 8-10 percent economic growth over the long term and lift millions out of poverty.

"Our overriding objective is to build India's productive capacity both as far as the hard assets and the soft assets are concerned.

"We recognise that unless we build India's productive capacity it will not be possible for us to sustain 8-10 percent growth over the long term unless we have really addressed India's supply side and productive capacity," he said. 

On the hard assets, he said the government has lined up huge infrastructure investments to develop the country's roads, factories, highways and bridges.

He added that the Modi government is also paying great attention to soft assets including improving employability and skills of the workforce, educational institutions and building an innovation eco-system that will propel entrepreneurship and start-ups.

"We need both the hard assets and soft assets to be very very robust so we can have the 8-10 percent sustainable and steady growth for the next couple of decades which we need to lift all of India out of poverty," Sinha said.

On measures being taken to transform the fiscal architecture in the country, he said the Goods and Services Tax has tremendous industry support and it will get passed "sooner or later".

"We know that sooner or later it will get passed, in the winter or the budget session. No body can deny an idea whose time has come. It is bound to happen and is just a matter of time," he said.

Sinha blamed the Congress party for stalling the GST reform and said the party will not be able to block the reform any more given the support for it.

"The Congress, in its last ditch effort to maintain political relevance, blocked the GST in the Upper House. They can do it for some period of time but given the weight of opposition to their position they are going to have to yield as far as the GST is concerned," he said.

He also pointed out that India will bring down its corporate taxes gradually to a flat rate of 25 percent and in order to simplify and streamline corporate taxes, the government will "get rid" of a whole host of exemptions that create litigation and confusion.

On land reforms, he said while the land acquisition bill could not be passed, the states are now putting in place their own progressive legislations on land.

He stressed that the real challenge is in implementing the reforms and initiatives.

"It has taken time to formulate some of these policies. But we have to work within a government machinery that has become very dysfunctional over the last 65 years," he said, adding that the government is trying to "clean that up from top to bottom but it takes time".

"We need to keep pushing so that we develop the actionable approach in government and if we put together the execution mindset, we will have the ability to put India on the robust sustainable growth trajectory," he said.