A time will come when a company can be set up without any hassles, says Finance Minister Arun Jaitley. In a conversation with journalists immediately after presenting his Budget, Jaitley explained the reasons for withdrawing exemptions for corporate entities. Edited excerpts:

What is the rationale behind lowering of corporate tax and withdrawal of exemptions?

Our corporate tax rate is considered very high, which is one of the reasons for investors moving out of India. Although the corporate tax rate is 30 per cent, considering the exemptions, the effective rate is 23 per cent. Regarding exemptions, almost 90 per cent of tax litigation is mainly on the question of applying the exemptions. We want to make the system better and at the same time we do not want to create instability. This is why we have decided to lower the rate and withdraw exemptions in phases from the next fiscal. I would also like to make it clear that exemptions should be for individuals and we have said that will continue.

You have raised the fiscal deficit target by 30 basis points to 3.9 per cent of GDP for fiscal year 2015-16. What kind of extra money will be available for public investment in infrastructure from this additional fiscal space?

We have provided ₹70,000 crore for capital expenditure. Had the fiscal deficit been kept at 3.6 per cent, this amount would have been around ₹40,000-₹45,000 crore. So, there is room available for additional expenditure up to ₹30,000 crore for infrastructure.

What are the key takeaways from the Budget?

There are many. For example, States will not starve for funds. This may shrink the national expenditure now, but with the expectation of tax buoyancy from next year and 15 per cent growth in tax collection, we expect overall expenditure to increase. Secondly, we have done a lot for the poor by way of social security schemes. At the same time, there are a lot for the middle class also.

But the middle class seems to be unhappy…

For salaried people, transport allowance has been raised.

Then you have the incentive for medical insurance and new pension scheme. They are getting more incentives now.

What is the key change in ease of doing business?

What we intend to do is to allow people to set up an industry without approval.

A Japanese investor told me that your Government lays red carpet, but getting approvals takes a lot of time.

In many countries, there are guidelines on various requirements such as municipal, water, electricity, labour etc.

If you don’t follow them, then there will be action from the concerned department.

For job creation, we have to see how a business can be started with publicly stated guidelines and criteria.

I have talked about appointing an expert committee to suggest a draft legislation where the need for multiple prior permissions can be replaced with a pre-existing regulatory mechanism.

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