GST, banks revival Govt’s top priorities: Jaitley

It was crucial to reviving the banking sector but ruled out any possibility to sell controlling share in PSBs

The Dollar Business Bureau

Finance Minister Arun Jaitley on Wednesday said that the government will continue with the tax reforms, repair the banking structure and to get moving stalled infrastructure projects to drive growth. However, it is not still ready to sell off its state-run banks.  

On the top of economic policy priorities, Jaitley said that he was firm on sticking to a ‘very stiff’ timetable that foresees passing crucial enabling legislations for the new goods and services tax (GST) this season.  

He said that once implemented, the new GST would have a ‘transformational’ effect by developing a common marketplace for the first time in the country, whereas also serving as a transfer mechanism that would support the poorer federal states. 

The aim of the central and state governments would be to make the tax revenue-neutral, and when the tax gets implemented, to bring down its rate over time, he told The Economist India Summit held in New Delhi. 

The finance minister further said that it was crucial to reviving the country’s banking sector, but ruled out any possibility to sell controlling share in public-sector banks (PSBs) that control about 70 percent of assets in the banking system and hold the majority share of country’s bad loans of $120 billion.  

In order to strengthen PSBs, the government is merging some of them, but does not plan to cut the share of government below the 52 percent threshold, Jaitley said. 

Currently, India holds stakes of around 60 percent to 86 percent in almost two dozen public sector banks.

To get moving the stalled projects in infrastructure would support driving growth and providing development benefits to the 1.3 billion population of India, the growth of which remains to be below potential, Jaitley said.