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Govt defends pace of change, promises faster growth

January 12, 2015 15:35 IST

The government defended itself on Monday against critics who accuse it of being too slow with reforms needed to reboot a lacklustre economy, and top officials told investors the country was already heading for faster growth.

Prime Minister Narendra Modi was elected last year on hopes he would revive a languishing economy.

But with industrial output making only a tepid recovery, investors are asking how much substance there is behind his promises of reform.

"The mood around the world for investment in India is very positive. I see in days to come investment significantly going up," Finance Minister Arun Jaitley told Modi's flagship investor summit in Gujarat.

Jaitley said the government had moved to fast-track changes needed to increase investment, citing executive orders, including one to lift limits on foreign investment in insurance.

The finance minister had said on Sunday that the government recognised Indians were "getting impatient", but he said it was also accused of moving too fast - a reference to the use of executive orders, or ordinances, to accelerate change.

"We did take decisions the right way, because that was also intended to convey a message to every Indian and the investors all over the world that even if one house of parliament takes some time to settle down and start functioning, India cannot stop functioning in the meanwhile," he said.

Tax change promoted

Ordinances have been issued to relax land acquisition rules, foreign investment in insurance and to liberalise the coal sector.

These will need to be ratified within six weeks of parliament being convened.

Jaitley also promised imminent changes pushing ahead key reforms such as the introduction of a nationwide sales tax.

He said he expects India would implement a common goods and services tax (GST) across the country in the course of the next year.

In December, Jaitley presented the GST bill to parliament. Its enactment requires the support of two-thirds of members as well as ratification by at least half of the country's state legislatures.

Investors and manufacturers have long sought a GST as a game-changer that would simplify taxes while broadening the tax base.

Many believe GST could add as much as 2 percentage points to the growth rate of Asia's third-largest economy.

The Vibrant Gujarat gathering in Gandhinagar, whose guests include U.S. Secretary of State John Kerry, U.N. Secretary General Ban Ki-moon and World Bank head Jim Yong Kim, continues on Tuesday.

Aman Shah and Rupam Jain Nair
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