Arun Jaitley defends IBC amendments, says political opinion would not have allowed return of promoters

Finance minister Arun Jaitley defended the recent amendments to the Insolvency and Bankruptcy Code (IBC) saying that political opinion in India would not have supported the functioning of the IBC if, after a haircut, an existing promoter managed to get back control of the business after running it to the ground.

The finance minister was speaking at the Hindustan Times Leadership Summit.

The finance minister said that India has standardised itself for a 7-8 per cent economic growth rate on the back of strong macro-economic fundamentals.

"India has standardised itself ordinarily for a growth rate between 7 to 8 per cent. If it slows down, it is more towards 7 and if it paces up it is more towards 8 per cent growth. It's already close to USD 2.5 trillion economy in terms of GDP," he said

On the rationalisation of Goods and Services Tax (GST), Jaitley said that it has started ahead of the schedule and future rationalisation of rates would depend on the revenue collection. The government brought the effective tax rate down from 31 per cent to 28 per cent under the GST, he added.

Speaking on recapitalisation of banks, Jaitley said that it would allow them to increase lending. The banks were inhibited by a low capital adequacy ratio, he added. Once capital is infused, the situation will improve.

He said that one of the biggest challenges that the government inherited was the issue of Non-Performing Assets in banks which had affected the ability of banks to support growth. India's economic growth rate would have been a notch higher if the banks had the capacity to expand their lending during the slowdown days , Jaitley said.

On the government's push towards the infrastructure sector, he said that the Union Budget had already earmarked Rs 3.96 lakh crore for infrastructure spending. The banks have a lot of cash and they can finance the small and medium enterprises sector and the infrastructure sector, Jailtey added.