Fragile coalition can't undertake reforms, says FM Arun Jaitley

Amid speculation about opposition unity after the Congress snatched three states from the ruling Bharatiya Janata Party (BJP), Finance Minister Arun Jaitley on Friday defended the strong leadership of the Narendra Modi government and said “fragile coalitions” could not take stable policy decisions and pursue reforms.

“...You need a decisive leadership, you can’t have fragile coalitions because at the end of the day if one partner says I can pull down the government if you don't declare my state as special status, then those worse off can even say, why not me? And you would have half a dozen wanting special status,” he said at the annual general meeting of the Federation of Indian Chambers of Commerce and Industry (Ficci).

The Telugu Desam Party broke away from the ruling National Democratic Alliance over the issue of special status to the state in the aftermath of the creation of Telangana.

Jaitley said a coalition government would lead to a situation where the country probably would have a helpless Centre dependent on these kinds of players.

“And what the founders of our nation envisaged that India, which is Bharat, which is a union of states, then ending up as a confederation of states, and that is the last thing that India can afford,” he said.   

“If you need policy clarity, you will need policy and directional stability and you will need a decisive leadership which moves in that direction which will then create an economy which is fast growing with various market reforms,” Jaitley said.

As the issue of differences between the Reserve Bank of India and the government came to the fore when Urjit Patel was central bank governor, the finance ministry flagged the issue of liquidity and credit. Even industry bodies and lobby groups such as Ficci should have gone to the RBI to flag these issues, he said.

“...we told them that given what is within their power and domain and jurisdiction, these are the problems that the market face. Why alone the government, I think Ficci and other industry bodies should have gone to them just like it comes to us, and say that these are the challenges for the financial markets,” Jaitley added.

The finance minister said the country would clock a growth rate of 7-8 per cent despite global uncertainties and would retain the tag of the world's fastest-growing major economy.

"Our ability to be within that 7-8 per cent range is fairly certain though I see comments to the contrary but I am fairly certain.

Jaitley reiterated the government would be able to meet its fiscal deficit target of 3.3 per cent of gross domestic product in spite of a year when a shortfall in the goods and service tax is widely expected and the Centre faces additional expenditure on many fronts.