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UPDATE 1-India's finance minister defends approach to economic reforms
May 14, 2015 / 1:01 PM / 3 years ago

UPDATE 1-India's finance minister defends approach to economic reforms

(Adds details, quotes)

NEW DELHI, May 14 (Reuters) - Indian government on Thursday defended its approach to reforms, days after it succumbed to political pressure in parliament and delayed the passage of key land and tax reforms, a move that has tarnished Prime Minister Narendra Modi’s first year in office.

Investors had hoped that Modi’s biggest majority in the lower house in 30 years would speed up economic reforms, but that assumption took a hit when he sent the proposed legislation to two different parliamentary panels for a review.

While the move has delayed the measures until at least July, Finance Minister Arun Jaitley said on Thursday it was the fastest route to get parliament’s approval.

“I do believe that the road map that we have now developed of sending it to the joint committee is probably the fastest route to get the land bill approved,” he said.

The opposition Congress party, defeated by Modi’s nationalist party in a general election last May, has fought back against the land bill that seeks to make it easier for businesses to buy land, calling it “anti-farmer”.

The ruling Bharatiya Janata Party (BJP) is dependent on Congress and other parties in the upper house of parliament to pass the measure.

The delay has also cast doubts on Jaitley’s ability to meet his April 2016 launch deadline for the new goods and services tax (GST) that would harmonise a mosaic of state and central levies into a national sales tax.

The GST bill, after its passage in parliament, also requires the approval of more than a half of India’s 29 states.

Jaitley said the government would have to work overtime to meet the launch deadline.

“I am still hopeful, in fact very hopeful, that we will be able to achieve this,” he said.

Jaitley calls the GST the biggest tax reform since India’s independence in 1947, which could add as much as 2 percentage points to its economic growth. (Reporting by Rajesh Kumar Singh and Manoj Kumar; Editing by Nick Macfie)

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