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Finance Minister Arun Jaitley appealed to opposition parties yesterday to cooperate in passage of economic reform legislation, warning otherwise Asia’s third-largest economy “will miss the bus” again. |
The traditionally fractious parliament has been stalled once more by political rows that have hindered efforts by the new right-wing government to enact reforms and revive the stuttering economy.
Stormy scenes in parliament under the previous left-leaning Congress government also hindered economic reform efforts.
“The clear choice before us is — either we reform or we miss the bus once again,” Jaitley told a top-level corporate audience in a speech in New Delhi.
“If the latter were to happen, a whole generation will not pardon us,” Jaitley said.
He added there was a need for “a shared national vision” to get the country back to nine-to-10% annual growth levels it enjoyed until a few years ago to lift hundreds of millions of Indians out of poverty.
India has been stuck in the longest spell of below-five-percent growth in a quarter-century, hit by high interest rates, an investment slowdown and flagging consumer confidence.
Economic growth in the last financial year to March 2014 was 4.7% after falling to 4.5% the previous year.
This year, the government hopes growth will accelerate to 5.5% and next year “we have to first cross the
six-percent-mark”, Jaitley said.
Growth downturns and uncertain investment landscapes in other parts of the world mean “investors are looking to come to India”, Jaitley said.
But to capture this investment opportunity, India needs to slash red tape, liberalise the economy, speed decision-making and become a more business-friendly destination, analysts say.
“For the next decade we can have a full reform agenda on our table” if all sides get on board, Jaitley said.
Overseas investors have waited for years for India to overhaul its economy “and are confounded” by its failure.
“That is the challenge,” he said and asked, “Can we allow this to continue?”
The minister’s comments came a day after the government introduced in parliament tax changes which analysts hailed as a “game changer” that will cut the cost of doing business domestically and boost growth.
The government tabled the long-awaited goods-and-services tax (GST) harmonising varying state levies to create a single internal market.
The legislation will be debated in the next session of parliament and the government aims to implement the new tax in April 2016.
The government, led by Prime Minister Narendra Modi which was elected in May, is seeking to step up the pace of reforms after criticism from business it was not moving ahead swiftly enough.
Spelling out plans for the year ahead, Jaitley added the government “is determined” to go ahead with liberalising the coal and insurance sectors to draw more
investment.
He will present his first full budget in February.
The government is “absolutely clear about one fact — the (reform) course we’ve adopted is unalterable”, he said.
