Arun Jaitley, who served as the finance minister during the previous term of NDA, passed away on August 24, 2019 after a prolonged illness. The minister leaves his crucial mark on the country's economic structure as he led a series of landmark financial reforms including the substitution of the archaic indirect tax laws with the new GST system and also brought about the new bankruptcy code.
Here are listed out some of his major contributions to the Indian financial system or the economy as a whole:
1. Insolvency and Bankruptcy Code (IBC): The new bankruptcy code introduced by Jaitley is a phenomenal reform which replaced the earlier systems that took to managing industrial sickness in the country. And with it gruelling task of cleaning up of the banks' balance sheets came into action as some of them have been distressed due to unserviceable loans given out to insolvent firms.
2. Goods and Service tax: The GST implemented from July 1, 2017 came into picture to simplify the country's indirect tax system which was rather complicated and saw cascading effect i.e. tax on tax. The new GST system works by combining state and central indirect taxes.
3. Jan Dhan Yojana: This scheme also came to the fore with Jaitley at the helm of the finance ministry. Introduced in 2014, the program aimed at advancing financial inclusion in rural areas in particular. Also, as part of the scheme there was provided enhanced access to insurance, pension and credit and zero balance bank accounts were also introduced at the same time.
4. Demonetisation: While efficacy of this abrupt event that led to the scrappage of Rs. 500 and Rs. 1000 bank notes on November 8, 2016 is still a debatable point. It caused serious agony for the liquidity crunch that it resulted in. The move was however said to be implemented to unearth black money from the system.
5. LTCG tax: After its withdrawal in 2004-2005, the LCTG tax on equity and equity oriented mutual funds was reintroduced in Budget 2018 by Jaitley with a grandfathering clause. LTCG tax implies on gains made on securities such as shares, real estate and other equity funds when they are sold after a holding period of one year from the date of acquisition.
6. Recapitalization of public sector banks (PSB): Finance minister took to strengthening the ailing PSBs saddled with heavy NPAs with a massive dole out of Rs. 1.06 lakh crore in the financial year 2018-19.
7. Amalgamation of banks: To strengthen the distressed PSBs, another initiative which was taken under the leadership of Jaitley was amalgamation of smaller banks with the larger ones. SBI was the first to consolidate with its subsidiary banks and thereafter Dena Bank, Vijaya Bank were merged with the larger banking entity Bank of Baroda.
8. Selling of centre's stake in PSUs: To meet the country's fiscal deficit target, divestment of PSUs to cut down the centre's stake to the minimum required was carried out during the tenure of Jaitley. For FY20, the divestment target of Rs 1,05,000 crore was kept.