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What Lies Ahead Post the FM's US Visit?
SI Team
Thursday, July 2, 2015
The 10 day trip to US undertaken by India's Finance Minister (FM) Mr. Arun Jaitley had some takeaways as part of the government's agenda to woo investors. At the very onset of the trip the FM allayed fears of the global investors by driving down the point that the government is taking proactive measures on tax reforms and policy making. In his visit to the New York Stock Exchange he said that the reaction he got from the investors was over whelming and the investors are looking forward to making investments in India.

The FM highlighted the fact that India is going to surpass the projected growth figure of 7.5 percent. With India welcoming investments in infrastructure and manufacturing, it is likely to allure further flow of pension funds like the California Public Employees' Retirement System amongst others which are invested in areas that garners higher rate of returns. Jaitley held talks with the heads of various pension funds and government officials, assuring them of a favorable tax regime and security of their investments. To re-iterate the government's desire the FM chronicled the reforms taken by the Narendra Modi government. He also gave an update on the current status of the Land Acquisition Bill, the various labor reforms that have been introduced by the government since taking charge, and the government's determination in meeting the 2016 deadline for the introduction of the Goods and Services Tax Bill (GST).

But the FM did admit the fact that for the GST bill, the government has a short window when it comes to the implementation phase of the bill. He said he is conscious of the fact hence he has to walk faster to catch up with the proceedings. Along with the GST bill, Jaitley also admitted that there is a persistent concern over the tax regime in general in India which has proved to be discouraging for the investors. But the Narendra Modi government is tackling the situation by referring the archaic tax regime issue to the judiciary and has asked to have faith on the judiciary. Interestingly the FM also assured investors that the Law Commission is in the process of reviewing the whole dispute redressal system in order to bring some comfort for the investors. The judicial intervention when there are commercial disputes and deadlocks has been an area that has been bothering the Narendra Modi government.

Jaitley said that the next two-three years will be very critical for the Narendra Modi government as they enter the implementation phase for a lot of reforms that the government had declared after coming to the office. But Jaitley assured that government has already identified the problem areas which might turn out be obstacles. The government is hoping for more foreign funds after having relaxed FDI (Foreign Direct Investments) in various sectors like defense, railways, insurance amongst others. For the fiscal year 2014-15 India had received USD 1.82 billion in FDI. With Jaitley returning from a successful trip, the RBI Governor Raghuram Rajan can definitely have a good night's sleep.

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