NEW DELHI: Finance Minister Arun Jaitley today said achieving a 10 percent GDP growth rate is challenging and will depend on how the world is moving.
Speaking at the HT Leadership Summit here, he said India has done well by growing at 7-8 percent during the last three years. To scale to 10 percent rate is "very challenging" and it will not depend on domestic factors only but on how the world is moving, he said.
"India has standardised itself ordinarily for a growth rate between 7 to 8 percent. If it slows down, it is more towards 7 and if it paces up it is more towards 8 percent growth. It's already close to USD 2.5 trillion economy in terms of GDP," he said while delivering a lecture here.
On reforms, he said India has structurally reformed and there is no finishing line in reforms. Jaitley said the Goods and Services Tax (GST) started with different tax rates and they have rationalised rates on many items.
Going forward, future rationalisation of rates would depend on revenue collections, he said, indicating the merger of 12 percent and 18 percent rates into one while keeping a "thin" line of luxury and demerit items in the top 28 percent band.
Currently, the GST has four rates of 5 percent, 12 percent, 18 percent and 28 percent. The finance minister said a cogent GST mechanism has been developed and no country in the world has 5 percent tax rate.
Observing that country has moved away from the old era of double-digit inflation, he said, "Our statutorily fixed target is 4 percent. We have been able to keep our current account deficit under control, and over the last few years India has had exemplary performance in terms of being able to bring down its fiscal deficit," he said. The net effect of all these is that India is getting closer to a situation where the country can spend what it earns, and borrows relatively less, he said.
"One of the great challenges which remained in India and that directly impinges on the creation of the world-class infrastructure is that India was largely a tax non-complaint society," he said. Noting that the funding requirement for infrastructure in the country is huge, he said, the sector needs an investment of Rs 50 lakh crore over the next five years.
India has spent Rs 60 lakh crore in infrastructure during 2007-17. In recent time, the government has increased infrastructure spending, he said, adding the Budget 2017-18 made an allocation of Rs 3.96 lakh crore for the infrastructure sector.