Finance Minister Arun Jaitley promises 'civilised tax regime' to attract overseas investments

India will soon raise the foreign investment cap in insurance sector and work for making the tax regime "civilised" to attract overseas investments, Finance Minister Arun Jaitley on Wednesday said while exuding confidence of achieving 6% growth next fiscal.

Underlining that growth would depend on the states, he talked about cooperative federalism and announced release of Rs 11,000 crore to states in the current fiscal as part payment towards CST compensation to facilitate roll-out of the Goods and Services Tax (GST).

Jaitley was replying to a debate in the Lok Sabha on Supplementary Demands for Grants for an additional expenditure of over Rs 12,500 crore. However, the actual cash outgo would be Rs 500 crore. It was later passed by the House.

Referring to the Select Committee report on further opening of insurance sector, Jaitley said, "Large investments are waiting to come in. We have to open the doors." The committee has suggested a composite foreign investment cap of 49 per cent in the insurance sector, as against 26% FDI cap currently. "The government would endeavour to usher in a "civilised tax policy" to attract overseas investments, he said, adding FDI regime has already been relaxed in defence sector and has generated lot of interest from top global manufacturers.

On the growth prospects, Jaitley said there are challenges but hoped that it would be within the projected range of 5.4-5.9% in 2014-15 and cross 6 per cent in the next financial year. Economic growth fell to sub-5% in two consecutive fiscals in 2012-13 and 2013-14, he said, adding it had an impact on revenue collection, fiscal deficit and government's expenditure on developmental works.