Setting the economic agenda for the new year, Finance Minister Jaswant Singh Friday favoured speedy disinvestment, strengthening regulation, linking fiscal and monetary incentives to shore up productivity and growth.
"Government should withdraw from sectors where private participation is more productive and more efficient. Scope of government remains largely in social and infrastructure sectors, for it is the ultimate risk taker," Singh told the annual conference of Institute of Chartered Accountants in New Delhi.
Asserting that "freer the market, stronger should be the regulatory mechanism", he said, "We cannot have reforms in the absence of strong regulatory mechanisms."
However, he said, "Genuine reforms depend on the combination of market forces, the formal rules which the companies dislike and the self regulation which they prefer."
In this context, Singh said there was a need for redefining the role of government and the role of regulator, for which the Centre had initiated a number of legislations that were not only "with the time but ahead of time".
Stressing the need to reorient both public and private policies, Singh said, "There is a need to streamline public investment and social welfare programmes and create an enabling environment for public-private partnership."
"Government must link fiscal, monetary and other incentives to productivity so as to enhance the wealth of the country, which is essential to remove poverty," he said.
The finance minister also stressed on better coordination, cooperation and private-public partnership, and said these were crucial for attaining higher growth.
"A well-governed state and orderly functioning of markets are essential for high growth and sustainability," he said, emphasising on consultations, flexibility, decentralisation, selectivity, monitoring and coordination of policies and operations.
He said market failures have to be repaired and institutional structure and legal systems strengthened by improving corporate governance. In this context, Singh said the responsibilities of professionals like chartered accountants have increased to ensure better corporate governance and best international practices.
In the wake of corporate failures worldwide, he said, "CAs need to perform their jobs without any fear or pressures. They have to be more transparent in accounting practices. The recent financial problems in US companies like Enron and others indicate that there is enough scope for improvement in the professional integrity and accounting system."
Turning to globalisation and new financial architecture, Singh said corporates now have greater risk as the world has become a "global village" leading to greater competition.
"There is greater risks due to fluctuations in exchange rates, interest rates, financial derivatives, commodity prices and composition of currency and markets," he said, stressing the greater role of CAs to assist corporates.
For this, the finance minister said, the corporates need to strengthen their management information systems, asset-liability management, monitoring risks, better project appraisals and post evaluation, quality audit and prediction f sickness.
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