“Let me dispel any (notion) that GST has made life costlier. Item by item, I would challenge anyone to tell me if there is any one item for which tax rate has gone up after introduction of GST… So, the clue is, it will come down even further,” she told an audience that represented the best of India Inc at the stately National Centre for the Performing Arts in Mumbai.
A group of ministers on GST rationalisation has been set up under Bihar deputy CM Samrat Chaudhary.
Sitharaman said India has to guard against the dumping of excess inventory by other countries, adding that signs of a surge in the inflows of goods are already visible. Analysts have cautioned against a spike in dumping in India in the aftermath of the US imposing additional tariffs on countries including China.
The minister said the government’s focus will be to ensure small and medium enterprises have access to inputs at affordable prices without being a victim of dumping. “These are the balancing acts we have to do,” she said.
In response to a question on the proposed India-US trade deal, she said both sides are aiming for a mutually beneficial treaty. She said the government’s goal of making India a developed country by 2047 needs good traction, and exports have to be bolstered across sectors. “I am sure the commerce minister is seized of the matter,” she said. “He would take this agreement to meet the ambitions that we have in terms of promoting growth, and ensuring that supply chains are intact, smooth and flowing well. These will guide our position.”
Commerce minister Piyush Goyal was recently in the US, working on the proposed bilateral treaty.There will be more such bilateral trade agreements, Sitharaman said, as she alluded to the challenges of geo-fragmentation and protectionism in various parts of the world. She said national interest will guide the government’s position as it negotiates trade deals, including with the EU and the UK. It will adopt a “more hands-on approach” in negotiations and take a larger spectrum of stakeholders along, drawing lessons from earlier trade pacts, she indicated.
The finance minister highlighted the haphazard manner in which some of the trade deals had been hammered out during the UPA era and how they did not serve India’s interests, forcing the country to review its pacts with economies such as Japan, South Korea and Asean.
RISKS OVER NBFCS
Sitharaman said the concerns that prevailed last year over the risky micro-credit exposure of some shadow banks have dissipated following the central bank’s interventions. She said the risk was limited to some non-banking financial companies (NBFCs) that were small and probably too adventurous. “Now, I think there is a good correction happening there, so I’m sure it will settle,” she added.
The minister said it’s not yet decided whether the proposed deregulation commission to develop an investor-friendly framework in states will be a permanent body. While financial sector regulators can coordinate action under the Financial Stability and Development Council headed by the finance minister, there is no such forum for non-financial sector regulators, Sitharaman said. This warrants greater coordination among them.
The government, the minister observed, wants greater participation of retail investors in the buying and selling of shares of state-run banks, indicating the intent to dilute the Centre’s shareholding further in them.
PRIVATE SECTOR INVESTMENTS
Dwelling on private sector investments, the minister said these are guided by the commercial decisions of companies.
“I’m not asking them to say why they are or why they are not (investing), but I would certainly like them to talk about investment,” she said. “After all, if they don’t speak out, how will the government have any clue on how things are moving?”
Sitharaman called on all stakeholders to have faith in the India growth story and nurture positive sentiments, arguing against undue negativity. “You need to believe in India’s capacities — it is that sentiment which is missing,” she said.
India has remained the world’s fastest-growing major economy since the pandemic year of FY21, amid strong external headwinds, she said. Annual growth is estimated to average above 8% over four years through FY25.
