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Who says India has no appetite for major reforms?

Last updated on: April 23, 2012 12:59 IST

Who says India has no appetite for major reforms?

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Aziz Haniffa in Washington DC

N
otwithstanding his chief economic adviser Kaushik Basu's public prognostications that there would be no reforms till elections in 2014, Finance Minister Pranab Mukherjee said reforms are a continuing process.

Stating that there is no lack of an appetite by the Indian polity for reforms, he said an electorate's support or lack thereof, can be gauged only in the national polls.

He also argued that it was always the Congress Party, beginning from the early 1990s that had been the protagonists behind economic reforms in India.

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Photographs: Jay Mandal/On Assignment

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Basu, speaking at the Carnegie Endowment for International Peace - an influential Washington, DC think tank - had predicted that major economic reforms would hit a roadblock and nothing would be implemented until the next parliamentary election in 2014.

He said only some relatively less important legislation would see the light of day, if at all.

But after the elections, Basu said, "you would see a rush of important reforms," and India would be arguably one of the "fastest growing economies" of the world, and that if the new government has a clear-cut majority, the pace of reforms would be accelerated.

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Photographs: Jay Mandal/On Assignment

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Mukherjee speaking to reporters at the end of the World Bank/IMF spring meetings, with Basu at his side, declared, "Reforms is a continuing process.

It is not that you stop and go. One set of reforms demand another set of reforms in the policies - in the executive decisions."

Thus, reiterating that it is a continuing process, the finance minister recalled, "First demand was that you open the economy to outside investment - don't run a close economy.

That was a major reform in the foreign investment policy - foreign trade policy change, which was introduced in the 90's and thereafter it has been expanded."

"And recently we have announced the new manufacturing policy," he noted.

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Image: Pranab Mukherjee and Christine Lagarde (left) Managing Director, International Monetary Fund enjoy a lighter moment.
Photographs: Jay Mandal/On Assignment
Tags: , Basu , Mukherjee , IMF , India

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Talking about the recent Budget that he had presented in Parliament, Mukherjee, said, "I have introduced a series of measures to liberalise the external commercial borrowing.

We have also introduced a mechanism through which we can attract investment from abroad for long-term and the requirements in the infrastructure sector."

"Therefore, you cannot just say that this is the reform and by what time it will be completing," he argued. "It is a continuing process - it is an ongoing process," he said.

Obviously, not sharing Basu's contention that less important legislation may be implemented, Mukherjee rattled of three bills dealing with insurance, pension funds and banking that he was hopeful would be agreed upon in this parliamentary session.

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Image: RBI governor D Subbarao and Pranab Mukherjee.
Photographs: Jay Mandal/On Assignment

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He said, "In my budget speech, I have indicated that I will try to get the approval of the parliament in this session - I mean, the session which is going on currently now - three bills, an insurance amendment bill, pension fund regulatory amendment bill and banking amendment bill."

Mukherjee explained that these have already received the "recommendations of the parliamentary standing committee and after these being considered and incorporated or taking a view on it by the cabinet, it will be passed."

"We will try to get it passed in this session and if there is not enough time, then the next session," he added.

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Photographs: Jay Mandal/On Assignment

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When a reporter persisted on whether there is an appetite among the electorate for reforms, Mukherjee asked, 'How do you gauge the appetite of the electorate? So far, the electorate performance is concerned, it has been mixed. And, reform was never a major agenda in the provincial assembly election."

He argued that "that can be gauged only in the national elections."

Mukherjee, vindicating the Congress Party's penchant for instituting reforms, asserted that "Congress Party is one of the pioneers in introducing reform measures. Therefore, from that point of view, you can say, yes, there is an appetite."


Photographs: Jay Mandal/On Assignment

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