Arun Jaitley favours cut in interest rates to boost economy

The finance minister Arun Jaitley expressed his concerns over the high cost of capital and said that if the Reserve Bank of India lowers the cost of capital by bringing down interest rates, it would provide a "good fillip" to the economy.

"I am quite clear in my mind that the cost of capital has to come down. Inflation has moderated and global fuel price has eased. Therefore, if RBI, which is a highly professional organisation, in its wisdom decides to bring down the cost of capital (it) will give a good fillip to the Indian economy," Jaitley said, while delivering the keynote address at the Citi's Investor Summit ‘India - Poised for Higher Growth’ with a focus on Infrastructure in the country.

On the government's reform agenda, Jaitley assured that the central government would table the Goods and Services Tax (GST) bill in the upcoming winter session of the parliament and that he will inform Empowered Committee of State Finance Ministers of the draft Constitution Amendment Bill on GST before introducing it in the Parliament.

GST is being seen as a key to facilitating industrial growth and improving the business climate in the country. The bill, however, needs to be passed by a two-thirds majority in both the houses of parliament and by the legislatures of half of the 29 states to become a law.

He also hoped that the Insurance Amendment Bill gets passed in the upcoming session, which is slated to begin on November 24 and end on December 23, 2014.

It may be noted that the bill, which proposes to increase the FDI limit in the insurance sector to 49 per cent, has been caught in a logjam with the Congress-led opposition insisting that it be referred to a select committee.

Following the opposition, the government referred the bill to Parliament Select Committee to look into the matter. The 15-member committee is headed by BJP member Chandan Mitra, apart from members from Congress, Trinamool Congress and AIADMK, among others.

Meanwhile, he also hoped that the government will be able to achieve its disinvestment target of Rs 43,425 crore for the current fiscal.

"We have very ambitious disinvestment target this year. I hope we will be able to reach close to that," Jaitley said.

As regards Land Acquisition Act, Jaitley said that the central government is holding discussions with the members of the opposition parties to make necessary changes in the act so as to fasten the implementation of infrastructure projects in the country.

Dinesh Sharma, Additional Secretary, Department of Economic Affairs and SS Mundra, Deputy Governor, RBI were also present on the occasion. The summit was also attended by domestic and international investors.

(Edited by Joby Puthuparampil Johnson)

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