Prime Minister Manmohan Singh on Friday signalled the government’s intent to roll out more reform measures to spur economic growth, but several moves such as plans to further open up the insurance sector to foreign investment may remain stuck for want of political consensus as the country heads for a national election in a few months’ time.
“Reform is not an event, it is a process,” Singh said at a press conference in the Capital. “Therefore, so long as we are in power, we will continue to push the cause of reform wherever there is scope for it, and if circumstances permit us to go forward,” he said.
The fate of two of India’s biggest tax reform initiatives—the Direct Taxes Code (DTC) and the Goods and Services Tax (GST)—hang in balance as both will require Parliamentary approval.
Finance minister P Chidambaram had planned to introduce the DTC Bill, which seeks to overhaul income tax laws, in the Parliament’s winter session last month.
“I think the five months that are there with us, is still a long period of time for us to revive the growth impulses of our economy. If I am successful in doing that, I think I would consider that as a job having been well done,” the Prime Minister said.
He also expressed concern about low job creation in India’s factories despite high growth from many years over the last 10 years even as he admitted that domestic factors, such as project clearance delays and infrastructure bottlenecks, had hindered the growth momentum.
“This (low employment generation) is an aspect of performance which we are working hard to correct. We need a much stronger effort in support of small and medium enterprises which can be a major source of good quality employment,” he said.
Business leaders said more efforts were needed to revive the manufacturing sector, vital to spin jobs, multiply income and turnaround the economy which has crashed to a decade-low growth of 5%.
“We agree with the Prime Minister that a turnaround in manufacturing has yet to be achieved while the persistence of inflation continues to be a problem,” said Chandrajit Banerji, Director General of Confederation of Indian Industry (CII), an industry body.
Global credit rating agencies have been unsparing about their criticism of the management of the Indian economy, which has been hit by a policy gridlock and a string of tax disputes, in recent years.