Economic reforms are on course in India and the economy is likely to continue growing at 8.5% a year, finance minister Pranab Mukherjee said in Washington even as the US government kept up pressure for greater reforms, on the eve of India-US economic and financial partnership talks.
The US has consistently headlined reforms as its biggest concern, in the run up to the talks. US treasury secretary Tim Geithner stressed, in response to a question, that “From our perspective the most important thing we would like to see is progress on financial reforms.”
Mukherjee and Geithner were at a panel discussion hosted jointly by the Confederation of Indian Industry and Brookings Institute, a Washington DC think-tank. The partnership talks take place on Tuesday.
The US has said it’s keen to see reforms in key financial sectors such as banking and insurance, essentially allowing foreign companies larger scope, and in retail allowing multi-brand behemoths such as Walmart a platform in India.
“It (reform) is a constant exercise,” said the Indian finance minister, when asked if the reforms process had stalled, and that there was a perception that the political will to push it through was lacking.
“Structural reforms have been done, reforms in the mutual funds market, insurance sector, banking sectors, pension, etc are underway and the necessary legislations have been introduced in Parliament,” he said.
Mukherjee said his party lacks the numbers it needs to carry these legislations through Parliament on its own. Consultation with other political parties is on and “we hope the bills” will go through, he said.
Earlier, reading from a prepared speech, the finance minister sounded upbeat about India’s growth prospects. “Overall GDP growth in 2010-11 with a broad based performance covering all the three sectors of the economy has been estimated at 8.5% and the economy is expected to maintain the momentum in 2011-12.”
If the economy kept growing at this rate, the per capita income in India will go up to $10,000 by 2039 from the current $ 1,000, said Kaushik Basu, chief economic advisor. Basu, SEBI chief UK Sinha and RBI deputy governor Subir Gokarn were also at the same event. RBI governor Duvvuri Subbarao joins them at the talks Tuesday.