Chief Economic Advisor Kaushik Basu, on Friday, maintained that over the past few months, the government has been making efforts to solve the ‘trust problems’ with industry without any dilution in recent policies and hoped that with a couple of reforms in place the economy would bounce back from October onwards.
Economy will bounce back
Interacting with journalists on the sidelines of a function here, Dr. Basu said: “We want to work hand-in-hand with industry. There is [an] element of trust problem between industry and the government that has happened. Over the last several months, we were trying to correct it and we will try to correct this as much as possible in the coming months.”
Over the last couple of days, there has been a discernible change for the better in business and stock market sentiments after Prime Minister Manmohan Singh took charge of the Finance portfolio from Pranab Mukherjee, who resigned to contest the presidential poll as the UPA’s nominee and there has been hectic activity to kick-start the economy.
Asked if the change of guard at the Finance Ministry also signalled a re-think on tax policy issues, Dr. Basu said: “I don't think that any policy step [of recent months] has been diluted…We were giving actually for last couple of months, including during the time when Pranab Mukherjee was the Finance Minister, is the same message, that we want this industry to do well and we want to be as cooperative as possible.” Clearing the misconception over, the Prime Minister was building up a ‘dream team’ — as in 1991 — to push the pending economic reforms, Dr. Basu said: “I don't think that because of reorganisation you are going to see a boost...they are strengthening the economy which we have been working to capitalise on.”
Even as economic growth slumped to a nine-year low of 6.5 per cent in 2011-12, Dr. Basu was hopeful of a sharp recovery. “We are hopeful that economy is going to bounce back within 4-5 months. I mean it’s October. Before that I can't realistically say that there will be an improvement, but October onwards...” And, “if we can put together a couple of reforms”, things would speed up further and GDP growth will pick up any way, he said.
“We have been stressing that we will have to get a couple of reforms in place for which the big stumbling block has been getting all the political parties in the coalition together. So, that we have been working,” he said, and without divulging what the reforms would be, went on to add “these [reforms] have been part of government agenda for the last 2-3 months.”
Earlier, in his address at the ‘Statistics Day 2012’ function, organised by the Ministry of Statistics & Programme Implementation, the Chief Economic Advisor said that the country should pay more attention to business ethos. “How easy it is for you to run a business, to trade, to sell goods abroad, to bring in goods from abroad. It is not easy in India,” he said while citing a World Bank report on the ease of doing business in various countries. “It’s much harder in India...and this also contributes to us not being able to do that well in term of industry,” he said.
Stressing on the need for lesser regulations and easier business procedures, Dr. Basu said the purpose of the government was “not to impede and thwart, but to enable and facilitate, to make life easier. Responsibility of government is to enable and facilitate. This really needs to be stressed…Most Commonwealth [countries] have overhauled a lot of their governance system, we need to work much harder on this.”