Rejecting criticism that UPA is not serious on reforms, finance minister Pranab Mukherjee on Saturday said it is now time for the government to take some hard decisions and expressed confidence that three key legislations on pension, banking and insurance will be passed this year.
Speaking at a Washington-based think-tank, he said government is committed to economic reforms and has in fact has initiated the process of legislative and administrative changes on a number of issues that would benefit the economy.
"We are now at a juncture when it is inevitable to take some hard decisions. And this has been our approach, as I outlined in the proposals for the Union Budget 2012-13 recently," he said.
He was responding to questions at the Peter G Peterson Institute for International Economics, which had organised an event in association with the Confederation of Indian Industry (CII).
"In fact on the legislative front, we have already committed the preliminary legislative process for Pension Fund Regulatory Act, Insurance Act and Banking Amendment Act. These three acts, I do hope would get legislated in this calendar year. If not in this parliamentary session, then the next session," Mukherjee said.
At the same time, he acknowledged that there were certain reforms which could face difficulties given the challenges of the coalition era.
"Of course we have to persuade various stake holders including State governments, if we could do so perhaps GST and the constitution amendment necessary to implement GST would be possible to get it through this or the next session of the parliament and thereafter to be ratified by minimum 15 state assemblies before the end of the year," he said.
"So far the direct taxes are concerned I am quite confident that it would be implemented after the laws being passed by the next session of the Parliament from next financial year. On tax reforms, direct tax would be operationalized from the next financial year," Mukherjee said.
"In respect of indirect taxes the most important decision to be taken to implement the GST constitutional amendment that may be possible within this calendar year," he said in response to a question.
Earlier in his opening remarks, Mukherjee said the Indian economy is, in some ways, better placed than many other nations to withstand this fresh round of global economic turmoil.
"India's resilience results from the fact that the bulk of India's GDP is domestic demand driven. India's External Commercial Borrowings Policy has been successful in maintaining external debt at sustainable levels," he said.
"India's banking sector is robust and our regulatory architecture is mostly in place. There is unwavering commitment to reforms to further consolidate our economic strengths. The GDP growth in 2012-13 is expected to be 7.6%, which in the normal course should rise by another percentage point in the fiscal 2013-14. The downside risks of sticky global commodity prices, especially fuel oil remains and could undermine the anticipated growth recovery," he said.
"We have shown in the recent past that we have the capacity to grow fast. At the same time, we are stepping up our efforts to create more inclusive outcomes for our developing society," he said.
"Favorable demographics, resilient economic structure, high savings and investment rates with potential for further growth, stable democratic institutions and continued policy emphasis on improving social and physical infrastructure are factors that can help us in moving forward and even shouldering some of the global responsibilities. Indian enterprise has matured and shown that it has the capacity to compete with the best," he said.
"We have tried to address the short-term challenge of regaining the growth momentum while seeking to capitalise on the opportunities in an otherwise difficult global environment.
"We have focused on strengthening domestic growth drivers, encouraging private investment to regain its pre-2008 crisis growth momentum and addressing supply constraints in infrastructure and agriculture sector," Mukherjee said.
"The initiative on improving the employability and opportunities for livelihood has been further strengthened to create more inclusive outcomes in both rural and urban areas. A critical element of the strategy is to implement an ambitious but realistic fiscal consolidation road map, and leveraging technology to give effect to a quantum improvement in Government’s expenditure management," he said.
"While there can be no denying that, thanks to the pressures of coalition democracy, some reform measures had slowed down over the last year, but we have taken several steps in the past months to shore-up the short and medium term growth prospects," Mukherjee said.
"This includes a gradual liberalisation of capital market and encouraging capital inflows including through Foreign Institutional Investors, Foreign Direct Investment and in the area of External Commercial Borrowings, especially for infrastructure financing," he said.
"The investment requirements for the infrastructure sector are very large, estimated at USD 1 trillion, for the period covering India's Twelfth Five Year Plan (2012-17) and, of this nearly half has to come from the private sector. We have recently enabled a mechanism to enable access to the Indian debt markets through a mechanism of Infrastructure Debt Funds," he said.
"These are regulated entities which envision sustained long term interest of the dedicated long horizon investing entities like pension and insurance funds. A major initiative on reforms of both direct and indirect tax regimes is on the policy agenda.
"The Government has also taken measures to improve the credit flows to activities like skill creations, training and education which help in strengthening the medium to long-term growth prospects of the country," Mukherjee added.