Finance Minister Arun Jaitley on Thursday admitted that ‘chaining of the public sector to the legal regime’ affects their performance, especially in sectors where there is competition. The statement is seen as a reference to Hindustan Aeronautics not being selected as partner in the multi-crore Rafale fighter-jet deal.

“In sectors where there are public players as well as private sector players the environment for functioning of the two is entirely different. One’s transactions are audited by you and others are not. One has to give contract purely on tendering, others need not,” Jaitley said while addressing the Valedictory Session of the Accountants General Conference organised by Comptroller and Auditor General of India (C&AG) here.

In place of Central Public Sector Enterprise HAL, a company from private sector Reliance Defence was selected as partner in the offset deal by the French Aircraft manufacturer Dassault Aviation which triggered a huge political controversy.

The Minister said the legal regime was not fixed by the government, it was fixed by judicial pronouncement, which said that public sectors are also instrumentalities of the state and therefore are all bound by various constitutional provisions.

“I think we still have not paid enough attention to this chaining of the public sector to the legal regime that we have done, particularly in sectors where there is competition. And therefore, this impacts their performance, this impacts the timetable, whereas the private sector is free from this,” he said.

“If we want them to exist and survive with full financial strength then how do we allow them a level playing field. Now the dangers of that level playing field again will be that you spend public fund and hence a different regime would apply and the consequence is that there’s a vicious circle,” he said while admitting that he himself is yet to find a definite answer to this. He was hopeful that with accelerating pace of reforms, things would change and that would benefit public sector companies.

The Finance Minister said that formalisation of the economy has expanded the resources. “If we look at the functioning of the Direct Tax Department, various factors like strict compliance, rationalisation of tax structure, lowering the lowest slab, and the result of that has been that we are finding 15-20 per cent gradual increase in the tax collections every year,” he said.

Filing of returns

He said the total number of people who filed tax returns in India was 3.80 crore in 2014 which rose to 6.86 crore this year and is expected to touch 7.5-7.6 crore. Similarly, GST assesses registered a growth of 74 per cent during the first year of the new indirect tax regime, Jaitley said.

comment COMMENT NOW