India is among the most open economies, says Jaitley

India is one of the most “open economies in the world,” Finance Minister Arun Jaitley said on Monday, as he contrasted the country’s approach to reform to an increasingly inward-looking world.

“When the world is turning increasingly protectionist, India is opening up,” he told investors, politicians and business people gathered in central London, for a meeting hosted by the UK India Business Council and FICCI during a five-day trip to London.

“India has the potential for a growth rate higher than what we are achieving today,” Jaitley said. He added that in the early days of liberalisation there had been dissenting voices but those “fears have receded to the background.”

“You have much greater support for reform than any other time in history. The idea of a protectionist economy has not been an issue for India…We’ve opened up and it’s been more welcomed than opposed.”

However, he said that discussions with his counterparts in Britain have convinced him that Brexit cannot be “confused with any protectionist idea.” “There is a keenness to expand trade with India.”

Jaitley has used his public appearances during the trip to focus on India’s reform agenda, outlining the long-term impact it hopes the implementation of GST, and demonetisation, will have on efforts to improve the collection of taxes, enabling the government to increase spending on infrastructure and poverty reduction.

On Monday, he acknowledged there could be “teething problems” in the first days after the introduction of the Goods and Services Tax (GST), but maintained confidence in it coming into effect by July 1, and September at the very latest.

“We’ll have to learn to live with it,” he said.

Personnel are being trained for it, he said, and the IT network prepared.

“But in any great experiment of this kind it is likely to be there...it will be a far more efficient system,” he said.

“It will ensure evasion doesn’t take place. Every limb of a transaction would be captured in software and the quantum of taxes will go up — and as the taxation base increases, the state’s ability to make taxes more reasonable will be there.”

Asked about the health of the banking sector, and particularly non-performing loans in the state banks, he said the current quarter is looking better and that it is best to focus on the future, rather than “panic.”

The problems are confined to a particular few sectors and the Centre has taken steps to address the issue, he added.

He further said that there are calls for the creation of a “bad bank” or public sector agency to address the issue. “We are looking at several options on the table.”