WEF: India pitches reforms, economic planning to defy global slowdown

DAVOS: Ranked as the fastest growing economy in the world, India remains optimistic about defying the global economic slowdown by accelerating the pace of economic reforms. India can defy global economic slowdown by continuing reforms and “responsible” economic planning, India’s Finance Minister Arun Jaitley said on January 22 at the World Economic Forum in Davos.

With the focus on uncertainty in the global economy, Mr Jaitley struck a note of confidence, saying that India will prove its resilience. The success of second generation reforms hold the key. “If India continues its reforms and responsible economic planning, we can stand out. The Indian economy in 2001, 2008 and 2015 has shown resilience to defy global slowdown and crisis. Today, we are better equipped to face that situation and show the resilience,” Mr Jaitley said.

Economic Reforms

India needs to implement fiscal reforms that boost government revenues. Some of the major reforms taken by the government include increasing FDI in defence sector, modernising and upgrading the railways, ease of doing business, launching initiatives to support startups and scaling up infrastructure .

In the railways, India has allowed private sector participation and it plans to raise funds through bonds. In the defence sector, India has increased FDI to 49 percent and in some cases 100 percent after approval from the Cabinet Committee on Security (CCS). India is also pushing for indigenous manufacturing in the defence sector through the ‘Make in India’ initiative.

The government is looking at opening up FDI in multi-brand retail as well as allowing corporates in agricultural farming. India permits 51 percent FDI in the multi-brand retail sector. The NDA government is opposed to allowing FDI in multi-brand retailing, but it has not yet scrapped the policy approved by the previous UPA government.

India Inc has also been pushing the government on implementing the Goods and Services Tax (GST) at the earliest. The GST has hit a roadblock in Parliament.

“Money is being withdrawn from several markets and getting invested elsewhere. Investors are being cautious and averse to risk in an environment of uncertainty. So, stock markets across the world have been adversely impacted… the currencies in most parts of the world have also been adversely impacted. In fact, the impact on currency has been the least in case of India. Nonetheless, there is an impact,” Mr Jaitley said.

According to Mr Jaitley, India has been taking steps to address infrastructure constraints, Reassuring global investors Mr Jaitley said, “the country had crossed that stage when change of government in power used to result in problems for an infrastructure project, adding that now the dispute resolution mechanism has been made very robust.”

The Indian government has unleashed a set of economic reforms that will bolster India’s growing economy. However, with concerns being raised by global investors that despite the measures taken by the government led by Prime Minister Narendra Modi that there isn’t much progress on the ground, the government has been reassuring investors about India’s economic prowess.

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