Reserve Bank of India Governor Raghuram Rajan, coming in support of the government has said that the new government has taken steps to propel growth, adding that the expectations from the new government when it came to power last year were “probably unrealistic” but it has taken steps to create an environment for investment.
Rajan said that the government is sensitive to the concerns of investors and is looking into addressing economic issues. There are several areas where the government has taken more “serious and significant” advances to improve investor confidence and propel growth. The RBI governor said a “big part” of the business environment was taxes and the government had said it would not bring retrospective taxation again.
The governor said that investors’ unhappiness over the taxation issues could have been avoided, but once raised; they have to go through a legal process which is on. He added that India could have done a “better job” in handling tax issues, but “going forward the government says no more of this kind of stuff”. “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'. The corporate tax rate will also come down 1 per cent every year going forward, he added.