NEW DELHI, Oct 8:
Asking opposition parties not not to indulge in obstructionism, Finance Minister P Chidambaram today said inability to push key reforms would put the country at the risk of a sharp and continuing economic slowdown.
“Every government is entitled to lay down policies. Opposition to policies is legitimate, obstructionism is not,” he said while addressing the annual Economic Editors’ Conference.
“The government of the day must be allowed to lay down policies, pass legislations wherever necessary, and get on with the job of implementing those policies,” the Minister said, while apparently referring to opposition threatening to block implementation of FDI in multi-brand retail policy.
Noting that Indian economy was challenged, Chidambaram said, “Without reforms, we risk a sharp and continuing slowdown of the economy which we cannot afford given the imperative need to generate jobs and incomes for a large population, most of whom are young.”
Estimating that the insurance sector alone needs USD 5 to 6 billion in the immediate term, he said the government intends to meet BJP and other parties ahead of the Winter Session to seek their support to raise the FDI cap to 49 per cent from the present 26 per cent as the sector require huge amount of capital.
Chidambaram said “by and large” the provisions of the insurance bill are along the lines recommended by the Standing Committee for Finance and he does not expect any opposition to the entire bill or the most of its clauses. On his part, he promised to take steps to deal with inflation, fast track disinvestment and announce a roadmap for fiscal consolidation after receiving feedback on the Kelkar Committee report.
India’s economic growth during 2011-12 slipped to nine- year low of 6.5 per cent and during the first quarter of the current fiscal it was 5.5 per cent.
Expressing confidence that with requisite savings and investments India’s economic growth rate will recover to 8 per cent and more, and perhaps touch 9 per cent, the Minister said, “We should keep that rate of growth as our objective and progress towards achieving that objective.”
The government has recently taken a host of reform initiatives but steps like hiking the FDI cap in insurance and pension to 49 per cent would require legislative changes, which would not be possible without the support of main opposition party BJP.
“Long standing structural reforms required to achieve high investment and high growth rates have been held back because of many reasons.
“Among them are…The need to forge a consensus on reforms, the practical necessity to garner support across the political spectrum to pass legislation… Nevertheless we are now addressing the difficult areas of reforms”, he added.
On the government’s decision to allow FDI in multi-brand retail, Chidambaram said, “We must not fear foreign investments in India. We have the sovereign right to decide where and how foreign investments would be allowed into India.
“I have no doubt…FDI in retail, aviation and FM radio broadcasting are decisions that will benefit the economy and the country,” he said adding that controversy over FDI in retail was in his view unnecessary and unjustified.
As regards inflation, Chidambaram said that appreciating value of the rupee would help in brining down the cost of imported crude, petroleum products and fertilisers.
“The value of rupee is an important factor that effects the value of imports. A depreciating rupee will also impact trade and investment. Hence, the need to stabilise the exchange rate. I believe that we have met with moderate success,” the Minister said. The rupee, which touched 57.22 to a dollar on June 27, 2012, has gradually appreciated to 52.13.
The other important task before the government was to contain fiscal deficit, he said, adding, “no one will have confidence in the Indian economy if there is uncertainty about the fiscal stability of the country”. (PTI)
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