After reforms row, Basu calls on PM

Chief Economic Advisor Kaushik Basu today met Prime Minister Manmohan Singh. The meeting comes in the wake of a controversy that resulted from Basu’s remark on economic reforms in Washington last week, remarks he maintained were distorted by the media.

The Press Trust of India said Basu, who would be in office till August, is believed to have given a clarification on his comments to Singh.

However, officials said the meeting had nothing to do with his remarks in Washington, which had generated a political storm, despite his repeated denials.

A few officials described the meeting as a courtesy call, while others said Basu and Singh discussed Standard & Poor’s move to lower the outlook on India’s ratings and its impact on the overall economy.

 

During a lecture at the Carnegie Endowment, Basu was quoted as saying major economic reforms in India would hit a roadblock and were unlikely to be carried out before the next Parliamentary elections in 2014. After 2014, “you would see a rush of important reforms”, he was quoted as saying. He had also reportedly said after 2015, India would be one of the “fastest-growing” economies.

However, later, Basu denied this, saying the reporter concerned had juxtaposed his remarks on liability of banks in Europe in 2014 with reforms in India. Meanwhile, the opposition had sensed an opportunity in Basu’s reported remarks, using these to corner the government.

Subsequently, Basu said India would see “some important” reforms in the next six months, including ones on subsidies, partial diesel decontrol and foreign direct investment in retail.

A Cornell University professor, Basu took over as the chief economic advisor in the finance ministry in December 2009. Though his term ended in February, he was given an extension till August, as the government was in the process of formulating proposals for Budget 2012-13.