India is undergoing a phase next only to 1991 in significance in terms of unleashing its productive forces, Finance Minister Arun Jaitley said on Thursday. In the U.S capital to attend a series of meetings at the World Bank, IMF and with U.S officials, Mr. Jaitley was talking at the think tank Carnegie Endowment for International Peace on India’s growth prospects. The minister said resistance to reforms from sectorial interests and political parties has declined,and there was a broad consensus on the desirable course for the country.
The minister said the 7.5 per cent annual growth looked impressive relative to the current global standards, but considering the requirements of India, it was “not good enough.” Mr. Jaitley said the Modi government has turned around the economic and governance outlook of India through a three-pronged approach – “being decisive, consistent and transparent.”
“The earlier government was considered to be following a political model where decisions were not fast enough and the direction was not clear,” Mr. Jaitley said, adding that the focus had shifted to redistribution and away from increasing productivity. “Many people ask where is the big bang idea of this government. But taking it all in totality, this government has undertaken the most critical and significant reforms after 1991,” the minister said.
Mr. Jaitley said the Modi government has tackled corruption, eased procedures and empowered the States to take decisions. Admitting that the easing of procedures is still a work in progress, Mr. Jaitley said what couldn’t be denied is the fact that “it is clear what the direction is.”
India has wisely used the gains made in declining oil prices by not transferring all of it to the consumers, the minister said. “The government kept significant part of the revenue gained and diverted it to social sector and infrastructure.” The minister said agriculture was a priority for the Modi government and public spending in the sector would continue.
‘Compassionate agenda’
Mr. Jaitley said while the government’s focus was on increasing productivity, it also believed in proactive policies for redistribution. “Redistribution is not something that happens on its own,” Mr Jaitley said. Explaining the development philosophy of the government, the minister said that growth in itself would not be sufficient for India. “We will have to see whether growth is reducing and eliminating poverty. Does it create jobs? Is it helping Indian villages? How much of the new resources is going to the vulnerable sections of the population?” Mr. Jaitley said.
The finance minister said the political climate in India now accepted economic reforms. “In the Nehruvian environment of regulations, we only understood the benefits of regulations. Now we understand the benefits of deregulation. Everyone understands the virtues of deregulation. No reform has been abandoned because of politics. Yes, it may take time but it will happen. GST is hanging now, but it wont hang for too long.”
