Revive animal spirits for growth, says PM

A day after he assumed additional charge of the finance ministry, Prime Minister Manmohan Singh on Wednesday hinted at corrective action on the tax front.

That indicated the government might re-look at the implementation of retrospective legal amendments to tackle the Vodafone tax case and the General Anti-Avoidance Rule.

In a meeting with top finance ministry officials, Singh said, "We need to revive the investor sentiment, both domestic and international."

. . .

"There are problems on the tax front, which need to be addressed.

"On the financial sector side, we need to see how we can improve matters.

"There are issues about the mutual funds industry which need to be resolved.

"The insurance sector has seen a slowing down, which is not normal in a country with large unmet insurance needs," said Singh.

"I am happy to meet all of you in a new context, with me looking after the finance portfolio once again. Apart from a brief spell in 2008, I have been away from the details and nitty-gritty of finance for a long time," he said.

. . .

Saying the country was passing through challenging times economically, he said the growth rate had taken a dip, the industrial performance was not satisfactory, things were not rosy on the investment front and inflation continued to be a problem.

He said he was concerned about the way the exchange rate was going. "Investor sentiment is down and capital flows are drying up."

Singh stressed, "We need to work to get the economy going again and restart the India growth story."

He asked officials to "revive the animal spirits in the country's economy" and "reverse the climate of pessimism".

. . .

CRISIL Chief Economist D K Joshi said, "The issues raised by the PM are serious. Mining sector issues need to be sorted out, as because of those industrial output is not showing much growth. And, there has to be clarity on certain tax proposals."

CII director General Chandrajit Banerjee welcomed Singh's statements and called for a coordinated approach between the government and the regulators and said the Centre and states should work to implement the GST from the next fiscal year.

Before he left, Mukherjee had asked ministry officials to compile a list of pending issues that should be taken up by the next minister.

. . .

The list, comprising issues pertaining to matters such as the GST, the DTC, foreign investment, disinvestment and various financial sector Bills, among others, was sent to the PMO.

Indications from the PMO suggest Singh would handle the finance portfolio for a short period and a new minister would take charge some time after the vice-president's election in August.

Home Minister P Chidambaram, who was finance minister before Mukherjee, is being seen as the front runner for the post.