Modi's image was that of "Ronald Reagan on a white horse": Raghuram Rajan
Updated: May 20, 2015 05:06:06pm
While responding to questions after addressing at the Economic Club of New York on Tuesday, the RBI chief said, "This government came in with tremendous expectations and I think the kind of expectations were probably unrealistic for any government."
He said in the minds of the people, Prime Minister Narendra Modi's image was that of "Ronald Reagan on a white horse" coming to slay anti-market forces and such comparison was "probably not appropriate."
Rajan, however, said the government has "taken steps to create the environment for investment, which I think is important."
The government is "sensitive" to the concerns of investors and is looking into addressing economic issues, he said.
He said that a "big part" of the business environment is taxes and the government has said it will not bring retrospective taxation again.
"However once the tax authority levies a demand on you, there is a quasi-judicial nature of that proceeding and therefore it has to go through the courts before it is resolved. The government cannot intervene," Rajan said.
"Legacy issues are winding their way through the courts, including issues based on laws that existed before they were changed," he said.
The corporate tax rate will also come down one per cent every year going forward, he added.
The RBI chief further said that "perhaps" India could have done a "better job" in handling these issues but "going forward the government says no more of this kind of stuff we will do."
Dr Rajan said there are several areas where the government has taken more "serious and significant" advances to improve investor confidence and propel growth.
On the issue of subsidies, he said petrol and diesel subsidies have gone.
"Going forward these subsidies will be transferred directly into bank accounts," he said, adding that already the cooking gas subsidy is being transferred directly to bank accounts.
Rajan said there is a "broad consensus" for the Goods and Services Tax (GST) and while he had hoped for the GST Bill to have passed in the just concluded session of Parliament, he feels there is "enough momentum" that "it will be done well in time and roll out by March 31 or April 1 next year."
"In fact (the government) is going ahead with the apparatus to ensure that it is actually done," Rajan said.
Another key legislation that the government is focussing on is the Land Acquisition Bill, which is important from the perspective of certain public works, he said.
He said that since different states have their own land acquisition bills, some commentators have suggested the possibility that the states should decide for themselves as to how to implement their respective land acquisition provisions.
There are tremendous plans for investment, particularly in the Mumbai-Delhi industrial corridor and freight corridors, the RBI Governor said.
"My sense is that things are happening," he said. (KNN Bureau)