Arun Jaitley: Number of smaller reform measures by NDA govt equivalent to big bang reforms


Highlighting the ongoing shift in the policy and investment environment in India, finance minister Arun Jaitley, in a recent investors interaction hosted by foreign brokerage Citi Research, emphasized that the number of smaller reform measures taken by the government, is quite substantive and equivalent to big bang reforms.

Sharing his insights about the challenges that the economy faces in sustaining a high-growth trajectory, Jaitley also acknowledged a number of factors contributing to the weak private sector investments. Slow capital expenditure, banks’ stressed assets, agriculture productivity and potential risks to growth like oil prices and global headwinds impacting exports among others.

Jaitley mentioned that bank stressed assets are largely attributable to 5-6 sectors (steel, power, infrastructure, textile, agriculture) and the government intends to tackle the same on a sectoral basis. Also the government recapitalized banks to the tune of Rs 25,000 crore and intends to inject similar magnitude this year too. Moreover the functioning of the public sector banks (PSBs) has improved with top level selection being more tranparent. Government will also look at reducing stake in PSBs to 52%, once the financial health of the banks is restored. Also the finance minister does not believe that the

current political climate in India is ready for government to reduce ownership in PSU banks to below 51%, as an amendment to current banking act will need to be passed.

The thrust areas continue to be public infrastructure, rural economy and reforms. On the offset of the weakness in private capital expenditure, government has been able to increase investments into public infrastructure by utilizing the fiscal savings from lower crude. Jaitley also highlighted specific measures undertaken by the government to aid the rural economy in response to two consecutive years of sub-par monsoons. He also highlighted that GDP growth target could move up from 7.5% to 8-8.5%, if monsoon is 106% as forecasted.

The finance minister does not expect any major opposition to the bill (bankruptcy code bill) and expects to table the bill in parliament in May. GST has been cleared in the lower house and the numbers are shaping up in favor of the bill for passage in the upper house