Finance minister Pranab Mukherjee has rejected a suggestion from corporate America that a leadership "vacuum" was chipping away at India's investment climate and asserted that India has a "very powerful, strong and acceptable prime minister".
"How can I comment on the perception of some organisation or institution," he asked on Sunday while speaking to reporters when queried about a letter from the US-India Business Council (USIBC) to the White House. "I can only state the fact that there is no vacuum in the leadership of the union government."
"And there is a very powerful, strong, acceptable prime minister," said Mukherjee, who was in Washington to attend the spring meetings of International Monetary Fund (IMF) and the World Bank.
Harold 'Terry' McGraw III, USIBC chairman and CEO of McGraw-Hill companies, is reported to have suggested in a recent letter to President Barack Obama's deputy national security adviser Mike Froman that with Indian cabinet ministers busy dousing political fires, powerful bureaucrats were running the show in Delhi.
"What is apparent is that political power is devolving to strong state leaders, and the vacuum at the centre is allowing forces in government to move on issues that are harmful to India's investment climate," McGraw said in the letter.
Referring to his meeting with the US treasury secretary, who had raised the US business community's concern about certain retroactive changes in the Indian tax laws, Mukherjee said he had explained that the proposed changes were "not substantive, but only clarificatory in nature".
The proposed changes to impose retroactive tax on some international mergers that exchange Indian assets announced in the budget couldn't be used to reopen tax cases more than six years old as other legislation existed to prevent this, he repeated to allay the fears of the US business.
Rejecting opposition charges of a policy paralysis on reforms, Mukherjee said the United Progressive Alliance was going ahead with a series of reforms to spur the economy.
"Reforms is a continuing process. It's not that you can stop and go," he told reporters here at the end his four-day visit to attend the spring meetings of International Monetary Fund (IMF) and the World Bank.
On the legislative front, there are a couple of measures on the anvil and he would try to get parliament's approval on three important bills to amend insurance, pension fund and banking laws either in the current budget session or the next one, he said.
Asked if the Indian electorate had an appetite for reforms, Mukherjee said that recent provincial elections were no reflection of people's mood on reforms.
Going by the national elections where the Congress party, "a pioneer of reforms" increased its seats in parliament from 147 in 2004 to 207 in 2009, there was clearly an appetite for reforms in India, he said.
Starting with the opening of the Indian economy in the 1990s, with changes in the industrial, foreign investment and foreign trade policies, India has continued on the reform path, Mukherjee said, unfazed by chief economic advisor in the finance ministry Kaushik Basu's reported remark to a think tank here that major reforms were unlikely before the 2014 elections.
"Recently we have announced the new manufacturing policy and in the budget I had announced a series of measures to liberalise investment in external commercial borrowings," he noted.
A mechanism had also been introduced to attract investment from abroad for long term fund requirement in the infrastructure sector.
"Therefore you cannot say that this is the reform and it has been completed," Mukherjee said. "It's a continuing process. It's an ongoing process."