New Delhi, Jun 30 (DHNS): Within three days of Pranab Mukherjee resigning from the Cabinet to contest the Presidential poll, Prime Minister Manmohan Singh, who has taken charge of the Finance Ministry, seems to have set his government on the course of reforms yet again.
There is a flurry of activity in the Prime Minister’s Office and the North Block housing the Finance Ministry. Policymakers and bureaucrats are working overtime; and ministers are talking of hastening reforms, reviving the stock market and halting the slide of rupee somewhat.
Soon after Singh called for infusing “the animal spirit” in the country’s economy two days ago, there seems to be a barrage of new promises, with each minister talking in terms of the monsoon session being a landmark one as far as pushing reforms is concerned.
While Corporate Affairs Minister Veerappa Moily expected a push to legislation like the Provident Funds Bill, Insurance Reforms Bill and Labour Reforms Bill in Singh’s tenure as finance minister, Commerce and Industry Minister Anand Sharma was hopeful about passage of FDI in retail.
The Finance Ministry itself came out with a significant draft guidelines on the controversial tax law GAAR on Thursday night. The guidelines, drafted during Mukherjee’s regime, will now be passed only after the prime minister puts a seal of approval on them.
No retrospective effect
The prime minister expected to work towards removing some provisions impacting investment. The draft guidelines, among other things, made it clear that GAAR will not apply retrospectively.
Analysts are reading this development, which took place soon after Mukherjee filed his nomination for the July 19 Presidential elections, as one which gives way to a new thinking on GAAR rules and helps resume investor sentiment in Indian economy.
“Pranab Mukherjee obviously quite scared away investors with retrospective tax amendments and GAAR, it was a huge disappointment. He could not judge the mood of the country on this and many other reforms and later it became an ego issue for him,” Sanjaya Baru, former media adviser to the prime minister, told Deccan Herald. He said the prime minister now was only trying to alter that mood and inculcate a positive sentiment among investors.
Basu also recalled this year’s budget proposals by the finance minister, saying they were widely criticised for being a “disaster” not only on tax proposals but also for the way it sought to handle the deficit reduction and new major policy initiatives. Analysts have also blamed Mukherjee for trying to deflect the criticism of his handling of Indian finances by blaming Eurozone crisis and western economy recession.
The Opposition BJP, too, criticised the GAAR, asserting that it never wanted the measure brought in with retrospective effect.