New Delhi, Feb 27: India has the potential to surpass a growth rate of 7-8 percent and will continue to remain the fastest growing economy in the world, finance minister Arun Jaitley said on Tuesday.
“In fact, most in India believe that a 7-8 percent growth rate is an absolute normal as far as India is concerned. But the real potential of India is to beat that,” Jaitley said at the India-South Korea business summit organized by CII.
“And therefore with policy changes accompanied by a supportive global environment, India perhaps has the potential to achieve little more that”, he said.
Manufacturing is a sector, where India is trying to grow and achieve its best, Jaitley said, adding that the government is formulating policies conducive to domestic manufacturing.
In addition, the government is trying make procedures simpler to attract investment, which includes reforming the country’s taxation policies.
The implementation of the goods and services tax (GST) that unified dozen of central and state levies into a single tax system has made processes simpler for international investors, Jaitley said.
Currently, there are four broad tax slabs under GST — 5, 12, 18 and 28 percent — which can be converged in the future.
“After the thinning of 28 percent bracket, the second stage of reforms will be consolidation of other rates. We have two standard rates (12 and 18 percent) and I do see them merging into one in a reasonable period when the compliance starts going up,” Jaitley said.
The government began the process of rate rationalisation soon after the implementation of the new indirect tax system from July 1. In October, it cut tax rates on close to 40 items and brought more than 200 items to a lower tax slab in November. Similarly, in January, rates of 84 goods and services were slashed.
“In the first instance, it was more of a statistical exercise to place each commodity into the taxation bracket closest to what it was earlier charged and then we started the rationalisation of rates. As part of rationalisation we are thinning the 28 percent tax bracket. It has been substantially thinned in the first 6 months of its introduction. This exercise will continue,” the finance minister said.