BREXIT: FM chants GST mantra from China, Guv assures liquidity support from Switzerland

Amid BREXIT fever and fear, Narendra Modi government now puts process to ensure a smooth passage to pending GST Bill on a fast forward mode. Hours since Britain opted for ‘Leave’ the European Union amid much depression worldwide, Finance Minister and a close political colleague of India’s Prime Minister, Arun Jaitley indicated here onwards, his government’s priority will be to clear the mess around GST Bill and turn into a law.

“For the medium-term, we will steadfastly pursue our ambitious reform agenda-including early passage of the GST Bill that will help us realise our medium term growth potential of 8 to 9 per cent,” said Jaitley in a statement issued on Friday afternoon. Emphasising on the strong fundamentals of Indian economy, the Finance Minister also said, “Our macro-economic fundamentals are sound with a very comfortable external position, a rock-solid commitment to fiscal discipline and declining inflation.” Interestingly, only two days before BREXIT referendum results came out, union government announced a series of reforms measures in various sections including defence, aviation and pharma helping the markets to absorb the potential damages could have been caused due to announcement of RBI governor’s decision not to seek a second-term. The series of reforms announced by the government within few hours since Raghuram Rajan’s letter to his colleagues in RBI, helped markets to contain the possible bloodbath—rather the markets though had opened in red, turned green promptly only to shut in deeper green.

Now facing the challenges coming from BREXIT results, the government has to come up with some concrete measures, at least certain announcements which may pacify the concerned, anxious individual investors. Jaitley’s statement clears the cloud and it is evident now, Modi and his team will be desperate to turn GST Bill into a law at its earliest possible.

Meanwhile, the governor of country’s apex bank, Rajan in a statement issued on Friday afternoon said, “It looks increasingly clear that the United Kingdom has voted to exit the European Union. Markets are trying to factor the consequences of this development and this has already led to sharp corrections in financial markets around the world. The Indian economy has good fundamentals, low short term external debt, and sizeable foreign exchange reserves. These should stand the country in good stead in the days to come.”

The governor who only on June 18 conveyed his decision not to continue in the coveted post after September 3, also said in a written statement, “The Reserve Bank of India is continuously maintaining a close vigil on the market developments, both domestically and internationally, and will take all necessary steps, including providing liquidity support (both dollar and INR), to ensure orderly conditions in financial markets.”