Jaitley hints at more reforms

He was speaking at launch of 'India Transformed', authored by economist Rakesh Mohan

Finance minister Arun Jaitley on Friday hinted at undertaking more reforms, saying the country needs to better its growth rates in the given favourable global environment.

A month after the launch of the goods and services tax (GST), Jaitley said there is no finishing line for reforms and India still has to cover a long distance to remove poverty and bridge infrastructure deficit.

India needed to pump in a huge amount of funds in sectors such as health, education, rural infrastructure and irrigation, he said at the release of 'India Transformed - 25 Years of Economic Reform' in New Delhi.

The book, edited by former RBI deputy governor Rakesh Mohan, has contributions from Mukesh Ambani, Montek Singh Ahluwalia, N R Narayana Murthy, Naushad Forbes, Sunil Bharti Mital, Baba Kalyani, Deepak Parekh, Y B Reddy, Strobe Talbott, and Gita Piramal.

Former prime minister Manmohan Singh released the book but did not say a word on the occasion.

Observing that the constituency of supporters of economic reforms has grown manifold since 1991, Jaitley said, "There's no finishing line as far as reforms are concerned and I think India still has to cover a huge distance."

He said given more favourable global environment, India needs to improve upon its growth rate.

The high growth rate, he said has to be sustained over a reasonably long period of time "because you still have [a] large number of people living below the poverty line, you still have [an] infrastructure deficit, you still need a lot of investment in health, education, in rural India and irrigation".

To substantiate his point that economic reforms now enjoy greater support, Jaitley said constitutional amendment Bill on GST was passed by Parliament unanimously.

Later in a panel discussion, Kotak Mahindra Bank managing director Uday Kotak said the next big reforms should be privatisation of public sector banks, saddled with a mess of non-performing assets.

"Whether this happens in one year or two years, sooner or later, we really need to move forward on that. The banking system is seriously lagging the potential economic growth. We should be really ready to take that plunge."

Chief Economic Advisor Arvind Subramanian says the economy faces the exit problem everywhere — whether in the context of NPAs, fertiliser or minimum support price issue.

Centre for Policy Research president Pratap Bhanu Mehta said though India did well compared to what it did during pre-economic reforms, "but let us not kid ourselves. We are still 130th in the Human Development Index and still account for only two per cent of the world trade."

He said the 1991 reforms missed the gender issue.

Rakesh Mohan said currency has appreciated by double digits since 2009 in real terms that does not make merchandise exports competitive and hence harm manufacturing.

To this, Subramanian said there has been progressive move towards opening of capital account since economic reforms. In that scenario, keeping exchange rates competitive is very difficult, if not impossible. To some extent, manufacturing is paying price for that, he said.

Mehta observed that one of the failures of economic reforms were that these were too much dominated by economists. "Where were scientists, where were engineers at the top executive positions. You need them to ask right kind of questions about manufacturing. If you think of romance of American manufacturing, it was not just about capitalists or free markets, but it was about scientists in key positions," he wondered.