Good monsoon to create additional demand, boost growth: Jaitley

India is growing faster than the rest of the word, said Finance Minister, Arun Jaitley but believes there is potential to do better.Speaking to CNBC-TV18’s Malvika Jain at New York on various issues like growth, bankruptcy code, monsoon, GST, interest rates, stressed sectors etc., Jaitley said India can grow faster if momentum of reform process continues; adding that the government would take further steps to revive stressed sectors if needed. India has grown at 7.2 percent and 7.6 percent despite bad monsoons in the last couple of years, he said. If monsoon is better this year then growth prospects look good, said Jaitley.With the Reserve Bank of India cutting benchmark rates by 150 basis points so far and inflation also on the downtrend, Jaitley is hopeful of economic activity picking up.He is also hopeful of the bankruptcy code getting passed during the Budget Session.“India needed a bankruptcy code long ago,” said Jaitley, adding that anyone obstructing bankruptcy code will add to the stress in the banking sector.Below is the verbatim transcript of Arun Jaitley's interview with Malvika Jain on CNBC-TV18.Q: Over the past few quarters consistently India has reported the highest growth rate. However you have said that you expect this momentum to continue subject to the monsoons.A: I don't I will get into this hypothetical situation because the current predictions are that we will have a more than a normal monsoon, now notwithstanding that also bear in mind that we have had two bad monsoons and we had 7.2 percent and 7.6 percent growth in two years in spite of a bad monsoon. So if there is a better monsoon, obviously the prospects look good.India in the last 100 years has never had an earlier example of three bad monsoons in a row and the predictions, these days they are fairly accurate, seem to indicate that we will have a reasonable monsoon. Assuming we have a moderate monsoon or a good monsoon, I am sure we will improve upon our growth rates but I see no difficulty in maintaining the present one because the thrust of the kind of economic activity going on in India, public investment, foreign direct investment (FDI), increased demand, these are all good signs now which are visible. Q: Governor Rajan has said that while several things are working for the Indian economy, we seem to be one-eyed king? A: Compared to the rest of the world we are growing much faster, in fact the fastest. Compared to our own potential, we can do better. So at 7.5 percent growth rate any other country in the world would be celebrating, but it is a tribute to India's growth story that at 7.5 percent we are still impatient because we know our potential is to do distinctively better and I see, as a couple of variables - if they work to our advantage, we can do much better.One, you mentioned the monsoon. Secondly, monsoon in-turn will also create additional demand particularly rural demand and that will have an impact on private sector balance sheets. So that is a spiral effect which is a second effect which takes place. Third is the momentum to the reform process must continue. So, if legislations like bankruptcy, legislations like goods and services tax (GST), we are able to see-through and our ability to impact on investor confidence will also increase.Please bear in mind that the general body of investors, world over, also are looking for investment destinations and there aren't too many at the moment. So if you are the only economy growing at that pace and you are able to demonstrate a potential for reforms then obviously you have an ability to attract global investors.Q: I wanted to ask you about Governor Rajan, how much credit would you give him for the kind of improvement or uptrend that you are seeing in the economy and there is question of extension of his tenure?A: I don’t think we discuss these matters in the media or publicly; it is not proper to make comments on this at all. I think the Reserve Bank has done fairly well in the last year, year and a half. It was confronted with a situation where you had a near double digit growth and that double digit growth led to a situation of high interest rates. Once the prices came under control, I think it was incumbent and this was a national expectation that the rates should go down.If you look at over the last year and quarter or so, the Reserve Bank has brought down the rates by about 150 basis points odd and I am sure if this trend of containing inflation continues, we can hope for a better interest rate regime which in turn will have a spiral effect on improving upon India’s productivity and generate more activity. Q: Is there likelihood that Raghuram Rajan will get extension?A: I don’t think it is proper to make public comments on these areas. They pertain to individuals occupying very eminent positions and I won’t do that.Q: Moving to the topic of non-performing assets (NPAs), the Supreme Court has been coming down very heavily on the regulator. They want names of defaulters to be disclosed but the RBI has made it clear that this is going to create a situation of panic in the country.A: I don’t think it is a situation for panic. NPAs can be created for two reasons. One there are business losses and certain sectors of the economy get adversely impacted. Second, some loans have been improperly granted. Now whereas any institution can look into the second category, the first category deals with policy domain. I think dealing with policy whether it is the Reserve Bank or the government of India, these are areas of executive domain.Now, how do you address the steel sector NPAs? There is no judicial process by which they can be addressed. They can only be addressed by sectoral changes or decisions which are required with relation to the steel sector because it was adversely impacted by Chinese steel flowing into the country at below cost prices. Now, a lot of management in relation to the NPAs has to deal with banks taking effective steps in order to recover debts, government of India -- the parliament creating a legislative framework like the Bankruptcy Law or amendments to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) law which enables and empowers the banks and thirdly government of India taking policy decisions along with central bank, etc in relation to the stressed sectors so that the stress itself can be addressed.Q: There were five stressed sectors that you had identified, one of them was steel, there was textiles, there was power, for all of them an overarching package so to speak is expected.A: They are already working. For instance the highway sector has already started working, the sugar sector is out of the distress situation, the prices are now fairly under control. Steel sector we have announced series of steps which has revived the steel sector. Over the next few quarters you would see the balance sheet of the steel companies impacting on balance sheet of banks in a positive manner. Power sector we have announced a package itself.So, there is nothing that the government has to work out. These are flexible situations, if a need arises we take more steps. However this government unlike the previous one has addressed each one of the stressed sectors so that collective action could be taken.Q: You mentioned about the bankruptcy code, there is a quote I have read in several newspapers from you regarding Kingfisher and how they probably had a bad business model. In situations like these do you think that had a bankruptcy code been in place earlier on we would not have been in a situation that we are in?A: India long ago needed a bankruptcy code. Not related to one company but series of companies. The fact that we did not have it was a vacuum. I am glad we are filling up that vacuum.Q: Do you see the bankruptcy code and the other legislations going through the parliament in the session which is likely to come?A: I think so. I think with the kind of pressures that the non performing assets (NPAs) have created on the banks, particularly some of these cases, anybody who tries to obstruct the bankruptcy code is only trying to help those who are responsible for the stress.Q: Will we ever see the Goods and Services Tax (GST) see the light of the day?A: Obviously you will see the GST. There is no law in India which has been ever abandoned because of parliamentary obstructionism. Obstructionism takes place but they are temporary.Q: You said you will be able to manage the Rajya Sabha?A: I think the numbers are changing and the numbers are changing for the better.Q: You have mentioned the government is working on a new direct tax system and that there is a possibility that you would put disputes behind you. What does this actually mean for companies like Vodafone? Are you saying that you will be willing to start with them afresh?A: I won't comment on individual cases. The government has said there will be no retrospective tax, we lived up to that word. With regards to all pending disputes, people who had unlawful assets outside India, we opened a compliance window, pay more and sleep well. With regards to those incomes which have domestically escaped assessment this Budget I announced the same. Where appeals are pending in relation to direct tax and indirect tax I have announced a settlement proposal. Therefore we want we want to clean the table and if a particular assessee doesn't want to clean his table and take his chance in the judicial system he is welcome to do so.