Chidambaram Favours More Reforms To Avoid Economic Slowdown

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New Delhi – Asserting that every government is entitled to lay down policies, Finance Minister P. Chidambaram on Monday said political parties may oppose, but should not obstruct decision making.

Addressing the annual Economic Editors’ Conference here, Chidambaram cautioned that the absence of economic reforms would slow down economic growth.

“Every Government is entitled to lay down policies. Opposition to policies is legitimate, obstructionism is not. The Government of the day must be allowed to lay down policies, pass legislation wherever necessary, and get on with the job of implementing those policies,” said Chidambaram.

“Whether the policies are right or wrong and whether the policies have brought benefit to the people are matters on which the people alone can pass a judgment. Under our system there is a judgment day for every Government at the end of five years,” he added.

Chidambaram said the state of the economy is reflected by universally accepted indicators such as the fiscal deficit, the revenue deficit and the current account deficit.

“Without reforms, we risk a sharp and continuing slowdown of the economy which we cannot afford, given the imperative need to generate jobs and incomes for a large population, most of whom are young,” he added.

Chidambaram further said the ongoing controversy over FDI in retail is unnecessary and unjustified.

Chidambaram informed that the first comprehensive Cabinet paper on FDI in retail was prepared by the NDA Government in 2002, and that it was considered by a Group of Ministers.

“That paper acknowledged that FDI in retail was essential to improve the supply chain in agriculture which alone will bring benefits to both producers and consumers. That paper also endorsed the argument that FDI in retail will generate millions of jobs. The idea was never rejected. So, why should there be a controversy when the Government announced its intention to lay down guidelines in order to enable FDI in retail?” asked Chidambaram.

“Government has also made it clear that the ultimate decision whether FDI in retail will be allowed in any State will rest with the State Government concerned. No State can say that other States should also allow FDI in retail; similarly no State can say that other States should not allow FDI in retail,” he added.

The Finance Minister also expressed confidence that India’s economic growth rate would recover to 8 percent and more.

“We should keep that rate of growth as our objective and progress towards achieving that objective. Long standing structural reforms required to achieve high investment and high growth rates have been held back because of many reasons,” said Chidambaram.

“Among them are the need to forge a consensus on reforms, the practical necessity to garner support across the political spectrum to pass legislation… Nevertheless we are now addressing the difficult areas of reforms,” he added.

The government recently took host of reform initiatives, but steps like hiking FDI cap in insurance and pension to 49 percent would require legislative changes, which would not be possible without the support of the Bharatiya Janata Party.

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