India Economic Summit: Paving The Way For New Growth And Development
India Economic Summit: Paving The Way For New Growth And Development
FM Arun Jaitley has announced that the government will now check to see which loss making PSUs could now be privatised as supporting these with taxpayer’s money was just not feasible, during the India Economic Summit in Mumbai.
"Certainly, I am open to looking at some PSUs that could do better in private hands," Jaitley was quoted as saying at the India Economic Summit, organised by the World Economic Forum. "They are being sustained merely on government support. That is not a long-term solution. Taxpayers cannot pay for loss-making businesses.”
Many PSUs are on the verge of closing down as people have been facing unemployment, added the FM. Given the choice between these companies continuing in their present form and privatisation, the latter option is more preferable, the FM said. The FM had already told the Parliament in July that 4 PSUs were beyond revival and they would have to shut down. The recent closure of HMT points in that direction. Currently, a media report states that around 79 PSUs have been making losses and the public investment in these companies was about INR 1.57 lakh crore.
Divestment and not outright privatisation is the method which will be followed, Jatiley declared during an interaction with Klaus Schwab who is the founder and executive chairman of the World Economic Forum (WEF). As regards the foreign investors, Jaitley indicated that the government will follow sectoral approaches and he has indicated hope that the Parliament will approve the insurance bill seeking to raise foreign investment cap here to 49%. As some experts have been critical of the government and voiced their concern over the lack of big reforms despite a clear mandate, the FM said that implementation of reforms was not about a single sensational idea only and implementation of reforms was challenging in a developing nation where public opinion cannot be confronted and doubts have to be resolved.
The land acquisition law also received inputs from the FM during the Summit. Jaitley said focus should be on easing the procedure and there was a need to deal with the provision preventing private schools, hospitals and hotels on government land, as this would make smart cities tough to execute. India’s position on trade facilitation was also discussed during the summit. Around 800 business, government and civil society leaders from 40 countries participated in this year’s India Economic Summit.
At the India Growth Outlook session of this summit, the panellists highlighted the challenges and opportunities the nation faces as investor interest in India blooms . William Danvers, deputy secretary-general, Organisation for Economic Co-operation and Development, Paris, said "Clear and consistent communication between the government and the electorate would go a long way in building trust."
Gita Gopinath, Professor (Economics), Harvard University, indicated "The inflation is down, the Rupee stable, a majority government... The stage is set for stable reforms. However, India is yet to see any substantial revival of foreign investment.”
Anand Mahindra, chairman and MD, Mahindra & Mahindra said "The Indian economy is a giant flywheel and needs a number of shoulders. It imperative to clean the pipes and make life easier for the small and young enterprise." He sod for steady and consistent reforms saying "We have made a 100-metre race into a hurdle race.” Ajay Shriram, president, Confederation of Indian Industry (CII), said, "Clearing large backlog of projects will automatically change the business sentiment. "Big decisions have to be taken sooner than later. The government has to keep up the momentum." Mahindra added.
