Government Committed To Ensuring Macroeconomic Stability, Says Modi

Signalling that there would be no retrospective investigation of the books of companies joining the formal economy, Prime Minister Narendra Modi said his government was committed to ensuring macroeconomic stability, more investor-friendly initiatives and creating an environment to encourage honest business practices.

Addressing the golden jubilee celebrations of the Institute of Companies Secretaries of India, Modi for the first time directly addressed criticism that the National Democratic Alliance (NDA) has mismanaged the Indian economy – especially after the first quarter showed that economic growth slowed sharply to 5.7 per cent.

Making a detailed presentation, the Prime Minister said the macroeconomic fundamentals of the Indian economy were sound. According to him, the government was conscious that the structural reforms it had undertaken – the unified goods and services tax (GST) and the invalidation of high value currencies in last year’s demonetisation – were causing disruptions.

“Due to structural reforms, if any sector needs temporary assistance, the government will give, whether it the small and medium enterprise segment, exports or the informal economy,” he said.

Not only did Modi aggressively join the ongoing economic debate in the country, his assurance that the tax authorities would not hound companies joining the formal economy – particularly under the aegis of the GST regime – will address the concerns of a section of industry.

“People coming to mainstream (from the informal economy) fear that their old records may be reopened. We will not let that happen because earlier, their old way of business was necessitated by prevailing circumstances. Nothing is more sinful than blocking those who want to come to mainstream. Let bygones be bygones,” Modi said.

This is an issue that has also been flagged by several state finance ministers in the meetings of the GST Council.

“This fear of possible retrospective tax inspection and survey lies at the heart of the chorus against GST and its implementation,” wrote Haseeb Drabu in a column published in Mint on Wednesday (4 October) ahead of GST completing 100 days on 8 October.

Acknowledging this, the Prime Minister said the GST Council, scheduled to meet on 6 October, would review all issues of concern. “All parties and the state governments will work together and change what is required.”

Modi’s remarks come in the backdrop of concerns flagged by sections of exporters and small and medium enterprises which are struggling to cope with the transition to GST.

Modi reiterated his government’s commitment to combat corruption. “With the changing economy in the country, there will now be premium on honesty,” he said.

The Congress was unimpressed. “If histrionics and dramatics could improve India’s economy and create jobs, then Acche Din would have arrived today,” tweeted Randeep Surjewala, senior Congress leader.

“What Modi is trying to do is address the mindset of the nation and so it goes more deeper than a campaign-oriented mode; he is trying to stoke the sentiments of the people. Of course elections are always there, but Modi is trying to go beyond numbers, figures and temporary issues,” said N Bhaskara Rao, a Delhi-based political analyst.

Mint