No major reforms till 2014

[Yusuf]

The economic advisor to the PM has said there will be no major economic reforms till the next general elections in 2014. He said that the spate of corruption scandals has slowed down decision making process.

Now this is not good news for us. Better have early elections.

 

[Ray]

If there are no reforms, the the Congress Party will be in deeper problems.

It is all the fault of dual control of the Govt making the PM a mere puppet.

This image and lack of action and initiative has seriously dented the credibility of the Govt and the Congress Party.

 

[Mad Indian]

Kaushik Basu clarifies, opposition slams govt on reforms - The Times of India

Kaushik Basu clarifies, opposition slams govt on reforms

NEW DELHI: A day after his comments on stalled economic reforms kicked up a political row the finance ministry's chief economic adviser Kaushik Basu on Friday said his comments on the "possible European economic crisis of 2014" was wrongly compared to the Indian election in 2014.

Basu, however, did admit that he had in his Carnegie lecture said that "thanks to coalitional democracy, there is some slowdown in economic reforms and decision-making". He said he had aired similar views back home as well. "I specifically mentioned that the problem with the GST (Goods and Services Tax) reform was that the opposition realized this is a good reform. Therefore, it was reluctant to let it happen under the current regime.

"A single-party majority government would not face this problem. If there is a single-party majority in the next election, that will facilitate such reforms. I argued that some reforms, such as FDI in multi-brand retail, were likely to happen sooner because in principle they did not need the support of the opposition; and this will give a boost to the mood of the economy," Basu was quoted as saying in a statement from Washington.

Basu said the "poor" reporting of his comments was unfortunate. "Some of this was reported poorly, juxtaposing my comments on Europe in 2014 with the Indian election of 2014. This is unfortunate because the central message of my talk was the possible European crisis of 2014 and India's major rise thereafter, likely overtaking China," the chief economic adviser said in his clarification.

But opposition parties seized on his comments and slammed the government for lack of any meaningful economic reforms and the prevailing policy paralysis.

"He (Basu) has been forced by the government to issue a clarification. A part of the media may have got his comments wrong but the entire media could not have got it wrong," former finance minister and senior BJP leader Yashwant Sinha told TOI.

"Coalition politics alone cannot be held responsible for the lack of reforms. The issue is not coalition politics, the issue is management of coalition partners. It is a leadership issue," Sinha said.

The BJP blamed the disconnect between the Congress leadership and the government headed by PM Manmohan Singh for the policy paralysis. "This situation has arisen out of a disconnect between 10, Janpath (Sonia Gandhi's residence) and 7, RCR (the PM's residence)," party spokesman Rajiv Pratap Rudy told reporters.

The Congress party mounted a strong defence of the government's track record and turned the blame on the opposition.

"No, I do not think Mr Basu has at all talked about any policy paralysis, he may only have had in the back of his mind what happened in the last two Parliament sessions," said Information and Broadcasting Minister Ambika Soni, who is also a member of the Congress Working Committee.

She added that he may have been referring to the opposition (which) "was not cooperating in allowing any discussion in any of the 40-50 bills which are pending, discussions and clearance to be passed."

Deputy chairman of Planning Commission Montek Singh Ahluwalia, a close aide of PM Singh, too defended the reforms track record but admitted that a lot of reforms needed to be done.

"We are in the process of putting together the 12th Plan and that will lay out a whole five-year programme. But you never finish all the reforms that are needed to be done," Ahluwalia told Times Now.

"There are always reforms that need to be done but that does not mean that you can't get the economy back on high growth path and that is what we should be focusing on at the moment," Ahluwalia said when asked to react on Basu's comments.

HRD minister Kapil Sibal said, "How can I react on the economic advisor's comments? Those were his comments and you should seek clarification from him. I am not the right person". He however expressed hope that the pending bills would be passed.

The slew of scandals that emerged more than a year ago has impacted decision making and hurt implementation of policies while the UPA allies have forced the government to backtrack on key reforms such as the opening up of the multi-brand retail sector to foreign firms. Growth has slowed and business sentiment has been dented by the negative mood.

 

[thakur_ritesh]

This news shouldn't even have become a headlines any more, it is what is happening for the past 8 years now, question that comes to mind is, so what is new? If they have done so for the past 8 years, cant they keep doing it for the next 2 years as well?

After this confession, I am sure in the next few days we will get a "source" telling us how the government has "fast tracked the reform process", much like how the country was told about some fast track of arms procurement.

 

[KS]

The BJP blamed the disconnect between the Congress leadership and the government headed by PM Manmohan Singh for the policy paralysis. "This situation has arisen out of a disconnect between 10, Janpath (Sonia Gandhi's residence) and 7, RCR (the PM's residence)," party spokesman Rajiv Pratap Rudy told reporters

This is the exact problem...the tug of war between reformists (MMS, Pranab) and populists (Sonia, Rahul).

 

[ejazr]

The original Carnegie Endowment speech by Kaushik Basu is here
India's Economy and the Looming Global Economic Crisis of 2014 - Carnegie Endowment for International Peace

A very interesting talk in all ranging from the coming EU crisis in 2014 that may impact India to compulsion of coalition and opposition politics on reforms particularly the GST reforms and multi brand Retail FDI

The Full text below actually is a good summary of his talk.


Full text: Kaushik Basu's clarification on statement on reforms
New Delhi: Following is the text of the clarificatory note of Dr. Kaushik Basu, Chief Economic Advisor, Ministry of Finance regarding his lecture at the Carnegie Endowment in Washington on April 18, 2012:

"As the Chief Economic Adviser I have often expressed opinions which are not necessarily that of the Ministry of Finance or of the Government of India. This is one of the strengths of India that it allows us to generate and discuss new ideas without the Government having to first endorse them.

At the Carnegie lecture the gist of my argument was that 2014 was an important year because numerous European banks would have to begin to repay 1.3 trillion dollars worth of loans that they had received from the European Central Bank. This could precipitate a major global economic crisis - a third round of crisis after 2008 and 2011. I also asserted that despite India's current slowdown (growth in 2011-12 was 6.9%), we will see Indian growth picking up slowly initially. But soon after the possible European crisis of 2014, we could see India as the world's fastest growing economy, faster than even China.

I mentioned also, as I have done several times in India, that, thanks to coalitional democracy, there is some slowdown in economic reforms and decision-making. I specifically mentioned that the problem with the GST reform was that the opposition realized this is a good reform. Therefore, it was reluctant to let it happen under the current regime. A single-party majority government would not face this problem. If there is a single-party majority in the next election, that will facilitate such reforms. I argued that some reforms, such as FDI in multi-brand retail, were likely to happen sooner because in principle they did not need the support of the opposition; and this will give a boost to the mood of the economy.

Some of this was reported on poorly, juxtaposing my comments on Europe in 2014 with the Indian election of 2014. This is unfortunate because the central message of my talk was the possible European crisis of 2014 and India's major rise thereafter, likely overtaking China."

 

[Yusuf]

Coalition politics has slowed reforms, but UPA committed: Pranab Mukherjee

WASHINGTON, Rejecting criticism that UPA is not serious on reforms, finance minister Pranab Mukherjee on Saturday said it is now time for the government to take some hard decisions and expressed confidence that three key legislations on pension, banking and insurance will be passed this year.

Speaking at a Washington-based think-tank, he said government is committed to economic reforms and has in fact has initiated the process of legislative and administrative changes on a number of issues that would benefit the economy.

"We are now at a juncture when it is inevitable to take some hard decisions. And this has been our approach, as I outlined in the proposals for the Union Budget 2012-13 recently," he said.

He was responding to questions at the Peter G Peterson Institute for International Economics, which had organised an event in association with the Confederation of Indian Industry (CII).

"In fact on the legislative front, we have already committed the preliminary legislative process for Pension Fund Regulatory Act, Insurance Act and Banking Amendment Act. These three acts, I do hope would get legislated in this calendar year. If not in this parliamentary session, then the next session," Mukherjee said.

At the same time, he acknowledged that there were certain reforms which could face difficulties given the challenges of the coalition era.

"Of course we have to persuade various stake holders including State governments, if we could do so perhaps GST and the constitution amendment necessary to implement GST would be possible to get it through this or the next session of the parliament and thereafter to be ratified by minimum 15 state assemblies before the end of the year," he said.

"So far the direct taxes are concerned I am quite confident that it would be implemented after the laws being passed by the next session of the Parliament from next financial year. On tax reforms, direct tax would be operationalized from the next financial year," Mukherjee said.

"In respect of indirect taxes the most important decision to be taken to implement the GST constitutional amendment that may be possible within this calendar year," he said in response to a question.

Earlier in his opening remarks, Mukherjee said the Indian economy is, in some ways, better placed than many other nations to withstand this fresh round of global economic turmoil.

"India's resilience results from the fact that the bulk of India's GDP is domestic demand driven. India's External Commercial Borrowings Policy has been successful in maintaining external debt at sustainable levels," he said.

"India's banking sector is robust and our regulatory architecture is mostly in place. There is unwavering commitment to reforms to further consolidate our economic strengths. The GDP growth in 2012-13 is expected to be 7.6 per cent, which in the normal course should rise by another percentage point in the fiscal 2013-14. The downside risks of sticky global commodity prices, especially fuel oil remains and could undermine the anticipated growth recovery," he said.

"We have shown in the recent past that we have the capacity to grow fast. At the same time, we are stepping up our efforts to create more inclusive outcomes for our developing society," he said.

"Favorable demographics, resilient economic structure, high savings and investment rates with potential for further growth, stable democratic institutions and continued policy emphasis on improving social and physical infrastructure are factors that can help us in moving forward and even shouldering some of the global responsibilities. Indian enterprise has matured and shown that it has the capacity to compete with the best," he said.

http://m.timesofindia.com/PDATOI/articleshow/12786882.cms

 

[Ray]

UPA is committed indeed!

But they talk in contradictory voices!

 

[Mr.Ryu]

my only concern is poor MMS other cong leaders should be put to jail they eat us live