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Subsidies to be rationalised, joint session on insurance: FM

Laying the fiscal road map ahead of his first full- fledged Budget, FM sought to assure investors at the ongoing World Economic Forum (WEF) that subsidies will not be completely eliminated but only rationalised to cut expenditure.

Davos: Wooing global investors, Finance Minister Arun Jaitley on Thursday hinted at rationalising subsidies, rebuilding credibility of taxation structure and calling a joint session of Parliament to get the insurance bill passed if it is not cleared in the coming session.

Laying the fiscal road map ahead of his first full- fledged Budget, he sought to assure investors at the ongoing World Economic Forum (WEF) that subsidies will not be completely eliminated but only rationalised to cut expenditure.

Speaking at two back-to-back events on the second day of his arrival here, Jaitley touched a variety of subjects ranging from the challenges facing the government, the need to make it easier to do business in India and to India's relations with the US and Russia.

"As far as LPG is concerned, the first subsidy reform has started this month. From January 1, all subsidies with regards to cooking gas, now goes directly to bank accounts....

"Next stage, we have to carve out families who are not entitled... Kerosene is used both as fuel and also in dark areas in India. But kerosene is also being misused in many areas. So the next area we intend tackling is kerosene," he added.

"Elimination of subsidies in India, a country where one-third of people are still living in poverty conditions, is not possible, its not even desirable... But we have to rationalise our subsidies," he said.

He was speaking to investors at a breakfast meeting organised by CII along with Boston Consulting Group and another session devoted to India at the WEF.

Racing against time to convert various Ordinances into law in the Parliament session that will be dominated by financial business, Jaitley expressed confidence that insurance bill will be passed in the Rajya Sabha because Congress is also in favour.

"If it is not approved, we will go for joint session of Parliament. If it is delayed beyond six months, we will go for joint session where we will have majority," he said.

Jaitley said there was also a law that if someone invests during the Ordinance period, it will be irreversible.

"So we want investors to come in straight away. Those who come in before March 31, they have a permanent entry," he said.

Apparently referring to the controversial retrospective taxation of the previous government that spooked global investors, Jaitley said one major challenge was to re-build credibility of Indian taxation structure.

"I have publicly said I am against adversarial taxation. Currently I am in the process of making Budget and I have seen that I have not earned a single rupee from all those contentious cases. All I have got is bad image and no money," he said.

He was obviously referring to the disputes over tax on Vodafone and other foreign companies which the Income Tax Department lost in courts.

The Finance Minister also made it clear that he was against high tax rates. "We are not a high-tax government. We believe in giving more money into the hands of consumers so that they can spend," he said.

Replying to a question on whether the Minimum Alternate Tax (MAT) will be lowered or withdrawn to boost manufacturing, Jaitley said he cannot do so unless manufacturing picks up or he gets more revenue.

He said the government has a road map to bring down fiscal deficit to three percent of the GDP over the next couple of years from this year's target of 4.1 percent.

Maintaining that there was a "lot of mess to clear up" left behind by the previous government, he said India had become an unstable if not an unreliable investment destination.

"The last government even brought retrospective changes to tax policy. That actually became a defining moment. Then there was this thing about we (Indians) wanting to buy from foreign companies but not allowing them to come even with 49 percent stake.

"So we have defined our policies now. In my brief tenure as Defence Minister, I took some fast decisions and suddenly we had large Indian groups collaborating with foreign players in different sectors to make products in India," Jaitley said.

About Indo-US relations, Jaitley said the ties have been largely stable over the last decade and half.

"The last NDA government had excellent relations with the US and the UPA continued to build on that. We have a matured relationship... We are expanding our areas of cooperation and narrowing the differences," he said.

On India's ties with Russia, the Minister said both sides have always been great friends.

"There is no contradiction in being friendly with different countries. Russia has stood by us in critical times and once we were very depended on Russia for our defence needs," Jaitley stressed.

Emphasising that steps are being taken to tackle corruption, he said the word 'corruption' has not even been whispered since the new government came to power.

Jaitley said corruption not only increases the cost of doing business but also hits the country's credibility.

Jaitley said that the last one decade was effectively spent in going round and round and decision-making was also going round and round.

"Now, if we look at the change the biggest criticism that this government is facing is of fast decisions as against do-nothing approach. The criticism is now why doing it so fast. I think that was needed to do so," he added.

Noting that India has a Prime Minister who is willing to take decisions, Jaitley said so far there has been no other politician in India who has been so much criticised and demonised but he has the capacity to stand out and take on criticism.

"Among various options you (investors) have got, you will never regret a decision to come and invest in India," Jaitley said and added that clean energy provides a huge opportunity.

"I have publicly said that I am pro-poor and pro-business. I don't see a contradiction between the two," the Finance Minister said.

Describing the Goods and Services Tax (GST) as the most important tax reform, he expressed hope that the bill in this regard would be cleared in the coming Parliament session.

According to Jaitley, Prime Minister Narendra Modi has brought in a new approach of governance, including in selection of ministers and not going by the traditional mindset of "not ruffling too many feathers".

"Maharashtra and Andhra Chief Ministers are here in Davos and I would have wanted other Chief Ministers to also come," he said.

Talking about the Vibrant Gujarat summit, Jaitley said that earlier industry leaders and Union Ministers were kind of forbidden to go for that event.

"Our government is talking about states in East and North East areas, which may not be politically much favourable to us," he added.

On the issue of violence against women, the Finance Minister said that laws alone cannot resolve the problem. "People need to be educated and told from basic elementary education level against this menace," he said.

Regarding app-based cab services Uber, Jaitley said, "I don't think that they were shut down because of one incident and it was because they did not have certain permissions".

Referring to various programmes of the government, he said its financial inclusion programme is the most comprehensive one globally and 99.97 percent of households now have access to bank accounts.

"We worked really hard and had to go to inaccessible areas like those in naxal-hit states and border areas.

More and more people are being brought into the banking system and are being encouraged to use plastic currency," he said.

He also said the government is doing a lot on e-Visas to attract tourists.