Finance Minister Arun Jaitley has sought to assure American investors that the current phase of economic reforms being spearheaded by the Narendra Modi Government is India’s “most important and critical” since it first opened up its economy in 1991.
If the direction of the predecessor UPA Government was perceived to be unclear with decisions not being taken fast enough, the Modi Government has opened up sector after sector for international investment by dispensing with “conventional conditionalities”, Jaitley said in an address to the Carnegie Endowment on International Peace here on Wednesday.
The high point of this new reform push has been the absence of any resistance or even sectoral protest, he said, attributing the changed perceptions among the populace to an impatience for quick results.
What distinguishes the Modi Government from its predecessor is its “decisiveness, consistency in policy direction and transparency in functioning”, said Jaitley, who is here for the International Monetary Fund-World Bank meetings, beginning Friday.
Commenting on growth prospects, Jaitley was sanguine about the Indian economy closing FY 2015-16 with 7.6% growth, notwithstanding the contraction of global exports and two consecutive years of shortfall in monsoon.
Amid a rather weak outlook for the world economy, he felt India’s experience of strong economic growth, comfortable price situation, low current account deficit and adherence to fiscal recovery path have all projected it as an attractive opportunity for global investors.
The Finance Minister dwelt on India’s economic recovery and the various initiatives of the present Government, making a pointed reference to reforms in taxation, the “Make in India” programme, increased permissions for foreign direct investment participation.
He also spoke of expedited processes for granting clearances to new projects, steps taken for ease of doing business, rationalization of expenditure by making petrol and diesel prices market-linked and promoting financial inclusion.
Noting that India had suffered earlier with its “reputation” of not being the easiest place to do business because of a bad image associated with corruption and long-winded procedures, Jaitley stressed that the present Government’s emphasis has been on “decisiveness, consistency in terms of policy direction and transparence in functioning”.
“Every decision has been in the direction of eliminating governmental discretion,” he said, noting this approach has helped the Government itself operate freely without fear of needless controversies.
While industrial clearances at the Central level can now be expected within a matter of weeks, Jaitley credited the State Governments as well for giving up their earlier rigidities and now competing with one another as investment destinations.
As for removal of procedural hurdles, he conceded that this is still “a work in progress” with efforts going on for greater adoption of the practice of single-window clearance.
Elaborating on India’s growth dynamics, Jaitley said a level of 7.5 per cent may sound impressive in terms of current global standards, but India has both the need and the potential to do still better. With predictions of a better monsoon this year, he was hopeful of the country turning in a still better performance.