Pro-business means being pro-poor too: Jaitley

Dismissing criticism of the Government being ‘pro-business’, Finance Minister Arun Jaitley said: “Yes, we are. More activities in private sector will create more employment and generate more revenue. This can be used in poverty eradication.”

He clarified that there is no contradiction in being pro-business and pro-poor.

“In fact, if you stop business activity, then you would not have enough resources to help the poor,” he said.

Jaitley was replying to the over 15-hour debate on the non-taxation part — better known as Part A — of the Budget Speech in the Lok Sabha, on Friday. He announced new measures for the food processing and wind energy sectors.

The first big debate on the new Government’s key economic policy saw participation from 77 members besides written submissions by 87 members. There will be another debate on taxation provisions and a response by the Government next week.

Push for growth The Minister promised to take a series of steps besides the budgetary provisions for sustainable growth amid indications of recovery. He also spelt out his intentions to bring about “civility” in the tax regime, rationalise the subsidy system, maintain low taxes and boost infrastructure and housing to expand the economy while providing more resources for social sector programmes.

He hoped that inflation would moderate, which in turn will impact interest rates. This, he said, would also help the real estate sector which is considered to be the ‘engine of growth.’

Housing push “We want to incentivise people to buy their own houses. During Vajpayeeji’s Government a situation had come where paying rent was costlier than EMI. Interest rates have gone up since. Hopefully if inflation moderates, they may come down. And we want to go back to that situation where buying a house was cheaper than taking one on rent. That adds to national growth because it adds to real estate sector,” said Jaitley.

Foreign Direct Investment On raising the investment cap in Defence to 49 per cent from 26 per cent, the Minister said that around 70 per cent of India’s defence equipment is being imported.

This results not just in higher foreign exchange outflow, but also gives a sense that “our ‘defence’ is in foreign hands”. This impression needs to be corrected, he said.

A 26 per cent cap would not be attractive while 51 per cent cap will mean shifting the location from foreign land to here. So, in order to build domestic capacity, 49 per cent cap through FIPB and with Indian control, “is perhaps in the larger national interest.”

On raising the FDI cap in Insurance to 49 per cent from 26 per cent, Jaitley said that the sector was investment-starved. The health insurance sector, in particular, needs more resources, he said.

Jaitley added that in most countries health care has developed with the large involvement of health insurance.

“We do not have enough resources, so we adopted the same principle (as defence) and proposed a 49 per cent cap, with Indian control,” he said.

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