The Rajya Sabha member of Parliament from Andhra Pradesh, who has been given charge of the commerce
portfolio, will now have to play a key role in using exports
as an engine for growth
and come up with a new industrial policy
that will offer a road map and practical solutions to the industrial sector that is reeling under the impact of demonetisation.
The challenges are many as the previous commerce
minister, Nirmala Sitharaman, who has moved on to defence, has had an indifferent track record. The three years of her tenure at the commerce
ministry saw merchandise exports
fall to $274 billion in 2016-17, after reaching $310 billion in 2014-15 and $262 billion in 2015-16.
“Every responsibility of the government
is important and this is my ninth Cabinet-level position,” Prabhu said after Sunday’s reshuffle. His new task would be to ensure rapid economic growth
of the country, he said.
Officials point to a slowdown in the global trade
growth, apart from a crash in prices of raw materials
like processed petroleum, industrial metals and meat, which India exports
heavily. Domestic exporters, however, say the issue of falling competitiveness, loss of foreign market
for strong sectors like apparel and engineering goods and a growing trade
gap with China are more serious concerns.
Also on Prabhu’s agenda will be at least 16 free trade
agreements that India is currently negotiating with nations or nation groupings. While the completion of new agreements have been painstakingly slow, industry
voices saying existing trade
deals — such as the ones with Japan or Korea — haven’t benefited India have grown increasingly stronger.
Besides, India hasn’t made much progress during Sitharaman’s tenure at the World Trade
Organization on matters of international trade
rules. Its long-time demand of a permanent solution on stockpiling of foodgrain or a special safety mechanism for agriculture hasn’t materialised. Prabhu will also have to increase pressure on global Trade
Facilitation Agreement on Services which had been proposed by India.
The investment front seems better secured as the Department of Industrial Policy
and Promotion had under Sitharaman managed to ease more than 87 FDI
rules across 21 sectors to accelerate economic growth
and boost jobs.
As a result, one of the key poll promises of Prime Minister Narendra Modi — that of attracting foreign capital — has shown net positive results. FDI
inflows rose 23 per cent to $55.6 billion in 2015-16, creating a new record. In 2016-17, the figures were even higher at $60.08 billion.
The incoming minister’s toughest challenge would, however, be to jump-start the industrial growth
machine. At 5.7 per cent, the latest June quarter gross domestic product growth
figures were the lowest since the Modi government
came to power.
Prabhu’s tweet indicated his exit from Rail Bhawan: “Thanks to all 13 Lacs+ rail family for their support, love, goodwill. I will always cherish these memories with me. Wishing you all a great life,” he said.