New Delhi: India would
unleash more reforms in the next few weeks that would bolster the
"green shoots" of recovery and instil confidence in Asia's third
largest economy, Finance Minister P. Chidambaram said Friday.
The finance minister also spoke about what he called some "bitter
medicine" necessary to get back to high growth path.
A day after the cabinet headed by Prime Minister Manmohan Singh
took an array of decisions aimed at spurring growth, Chidambaram
said: "I am confident that the steps we have taken, and some more
steps that we will take in the next few weeks, will help turn the
Indian economy around."
He was addressing the Delhi Economics Conclave on "Reviving
Growth" organised by the Department of Economic Affairs, the
National Institute of Public Finance and Policy (NIPFP) and the
Confederation of Indian Industry in the capital.
Later in the day, while winding up a discussion on the first batch
of supplementary demands for grants in the Lok Sabha, he said some
tough measures would be taken in the coming days to get back to
high growth path.
"Some bitter medicine has to be taken this year... There is no
other way... This bitter medicine is good medicine. It will
restore the health of the economy and next year we can look
forward to much higher growth," he said.
After growing at over nine per cent, India's growth fell to
nine-year low of 6.5 per cent in 2011-12 and during the current
year, as per the projection of teh Reserve Bank of India, it is
estimated to be 5.8 per cent.
Chidambaram told the conclave that India weathered the 2008 world
financial crisis very well. But the challenge facing the economy
now was different from the one seen in 2008.
While in 2008-09, imports had reduced owing to a fall in
international crude oil prices, the situation now was different
as, while exports were declining, imports continued to remain high
mainly on account of crude and gold.
And with rapid globalisation, the external sector of the economy
was becoming more vulnerable, Chidambaram said and cautioned that
global developments may continue to have a huge impact on the
"The present challenge calls for bold and innovative measures," he
Speaking in the same vein, Raghuram Rajan, chief economic adviser,
said India was reaching the limits of stimulus and has been forced
to contemplate ways to achieve sustainable growth.
Chidambaram said the "government has been making every effort to
turn the economy around and encourage investments" and hoped the
various steps it had taken would show results.
"It is too early to say whether the measures have begun to bear
fruit, although it is our expectation that they will do so,"
Chidambaram also said the government was addressing tax issues
that had caused concerns among investors.
Last December, it seemed the cause for reform and growth in the
country hit a low when the government dropped plans to allow
foreign investors into retail trade. To its and the Prime
Minister's credit, it recovered and last week secured a
parliamentary mandate for the retail move.
Emboldened by the vote, the government Thursday decided to set up
of Cabinet Committee on Investment to fast-track large project
entailing investment of over Rs.1,000 crore, cleared the Land
Acquisition Bill and new urea investment policy, besides the
opening up multi-brand retail trade to foreign equity.
Chidambaram said countries such as China, India, Japan, South
Korea, Indonesia and Russia that are part of the G-20 to come
together to iraise the resource base of the Asian Development Bank
so that it could play a greater role in infrastructure financing.
The cabinet also decided to slash by 30 percent the base price for
telecoms spectrum in four metro circles including Delhi and Mumbai
that went unsold in an auction last month.
Arvind Mayaram, secretary in the finance ministry, said the
government wanted to maximise revenue and cut the fiscal deficit.
The industry meanwhile welcomed the cabinet decisions, especially
the setting up of Cabinet Committee on Investments to ensure
faster clearances for large projects.
"This will send a strong signal to the investors that Government
is willing to assist the industry through reforms and by further
improving the business environment. At a time when our economy and
manufacturing sector have slowed down, this single decision will
act as major stimulus for the economy," said FICCI president R.V.
According to Centre for Monitoring Indian Economy, projects worth
Rs.1.8 lakh crore got shelved during April-August 2012 period
primarily because of problems related to land acquisition,
environmental clearances and lack of fuel and mineral linkages.