Confident that the negative global cues can be transformed to the country's advantage, Finance Minister Pranab Mukherjee on Monday maintained that the adverse global developments, including the impact of the U.S. sovereign rating downgrade, present new economic opportunities to India.
In his address at a function here to mark the golden jubilee celebrations of the Indian Economic Service (IES), Mr. Mukherjee noted that in the wake of the global economic uncertainties and the resultant slump in overall investor sentiment, India could be a source of stability for the world economy and provide a safe haven for global capital inflows.
“If India can continue to grow and acquire economic strength, we could be a source of stability for the world economy and provide safe havens for restless global capital,” he said while pointing out that it “would also enable us to develop even faster and spread the benefits of growth to the poor and the marginalised.”
Global markets have been severely impacted by the U.S. rating downgrade by Standard & Poor's (S&P) and the ongoing debt crisis in the eurozone. Mr. Mukherjee admitted that these economic developments had impacted India too, and remained a cause of concern. However, he argued that they did open up new windows. “At the same time, these shocks are markers of shifting balance in the global economy, presenting new opportunities for us,” he said.
“We have to be alert to shape real-time policy responses, reform systems, improve the regulatory framework of our institutions and make the most of the opportunities coming our way,” Mr. Mukherjee said. The Finance Minister's confidence stemmed from the fact India's robust performance in difficult times has shown that “we could actually come out stronger from any international financial crisis.”
Mr. Mukherjee noted that the economic reforms undertaken more specifically since the 1990s had led to a rapid globalisation of the country's economy and, as a result, the nature and the domain of public policy making was undergoing a major transformation. While there was an urgent need to build and strengthen the public capacity to follow and analyse international economic developments, process information from diverse sources and respond to them quickly, in keeping with the national interests, he said that on the other hand, it was important to reorient government processes towards bringing about greater policy transparency, coherence and coordination across sectors and between different levels of government.
With greater role assigned to market forces, Mr. Mukherjee pointed out that there was a need to re-design incentive structures for development and regulation of markets and for improving the quality of governance. He noted that since the government on its own could not deliver on every aspect of the vast economy, its changing role was that of an ‘enabler' which required greater analytical capacity and economic expertise to be injected into the decision making processes.
Mr. Mukherjee said there was a significant scaling-up of the development efforts in social sectors, higher transfer of resources to the States and a move towards fuller integration of the economy with the proposed implementation of a uniform Goods and Services Tax in the country. Among others present at the function were Planning Commission Deputy Chairman Montek Singh Ahluwalia, RBI Governor D. Subbarao, Cabinet Secretary Ajit Kumar Seth, Finance Secretary R. S. Gujral, Economic Affairs Secretary R. Gopalan, Chief Economic Advisor Kaushik Basu, and other senior officials of the Finance Ministry.
On the occasion, the Finance Minister launched a website of the Indian Economic Service and a logo of the IES was also launched.