Making a fervent appeal to Opposition parties not to create any major hurdles for the reforms process, Finance Minister P Chidambaram on Monday said an inability to push through key reforms would put Indian economy at the risk of sharp and continuing slowdown.
“Every government is entitled to lay down policies. Opposition to policies is legitimate, obstructionism is not,” he said while addressing the Annual Economic Editors’ Conference.
“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.
Referring to Opposition’s threat to block implementation of government’s recent move to open up multi-brand retail sector to foreign companies, Chidambaram said the controversy over the issue is “unjustified and unnecessary”.
Seeking to clarify government’s stand on allowing 51 per cent foreign direct investment in multi-brand retail, he said the first comprehensive Cabinet paper on FDI in retail was prepared by the NDA Government in 2002. “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?,” he questioned. Giving a strong push to its reforms agenda that has been in a state of paralysis on the back of policy logjam and economic slowdown, the Centre took a bold step forward last month by finally operationalising 51% foreign direct investment in multi-brand retail sector, albeit with few riders. However, it has left the decision on setting up the retail stores on the respective state governments.
Exuding confidence that the Indian economy will bounce back to 8 per cent or over growth rates, Chidambaram said the major task before the policymakers is to promote savings and achieve a rate of investment of 37-38 per cent of GDP.
“At that level, given India’s incremental capital-output ratio, I am certain that growth will recover to 8 per cent or more and perhaps touch 9 per cent. While it would be premature and ambitious to talk of 9 per cent growth, we should keep that rate of growth as our objective and progress towards achieving that objective,” he emphasised.
While the government has projected the economy to grow at 7.6 per cent in the current fiscal, the 12th Five Year Plan document has forecast it to grow at 8.2 per cent.