Arun Jaitley, India’s minister of finance and corporate affairs, visited SIPA on October 10 to discuss “Policies and Initiatives for Promoting Growth and Investment in India.” In remarks before the Deepak and Neera Raj Center on Indian Economic Policies, Jaitley highlighted recent reforms and noted that India has already taken steps to establish a larger economy that is less hindered by corruption.
Jaitley was appointed to his current cabinet post by Prime Minister Narendra Modi in May 2014. The challenge facing the then new government, Jaitley said, was to “establish the credibility of the decision-making process of the Indian economy itself.”
He said the Modi team sought to achieve this by establishing processes for quick decision-making, pursuing difficult choices when necessary, and being clear about where they wanted to take the country, within the constraints of the democratic process.
After assessing the need for domestic investments, Jaitley said, the government worked to open various sectors to trade and market economies to attract foreign direct investment (FDI). He said that officials had overcome various hurdles including unclear taxes, narrow investment doors, and lengthy decision-making processes.
“In this brief time we [India] have become the largest recipients of FDI,” said Jaitley.
Jaitley also said the previous government had been hampered by corruption that flowed from a lack of transparency in funding political parties. He also observed that the structure of various laws had left too much power at the disposal of ministers.
To address the first problem, Jaitley said, a pending system of electoral bonds will require political parties to fund elections using clean money and formal transactions with banking institutions. To tackle the second issue, the government has pursued reforms to give states and ministers less discretion, creating more room in the process for markets to operate autonomously.
Jaitley also spoke about reforms that in recent months led the implementation of a new goods and services tax, or GST. He said the transition to a GST has been smooth, and that India’s economy and people would benefit in the long term, while also noting that data reflecting the change is incomplete.
He also touched on technology-based reforms that have led to more online tax filings and more efficient payment of social benefits, as well as infrastructure improvements and the nation’s demonetization reforms of 2016.
Professor Arvind Panagariya moderated the event, while Dean Merit E. Janow of SIPA and Professor Jagdish Bhagwati, director of the Raj Center, were on hand to welcome Jaitley and other guests. In her opening remarks, Janow emphasized SIPA’s enduring relationship with Jaitley, who has visited at regular intervals dating back to 2013. She also underscored the School’s commitment to studying India and its economy, and the scholarship of experts on its faculty.
— Sayan Das MIA ’18