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‘Reforms can offset slowdown impact’
MUMBAI: The spillovers of global trend of protectionist policies could be adverse, but domestic reforms can help offset the impact of global slowdown, union finance
MUMBAI: The spillovers of global trend of protectionist policies could be adverse, but domestic reforms can help offset the impact of global slowdown, union finance minister Arun Jaitley said on Thursday.
Speaking at a Brics seminar on investment flows, Jaitley said: “A part of the developed world is moving towards protectionism. These worries are real and they are real because of the fact that if developed countries see a trend of protectionism the spillover impact of those policies on other parts of the world could be extremely adverse.”
Protectionism typically includes restricting trade either by closing markets or imposing duties on imports that make foreign products costlier. This is done to protect local goods and companies.
Brics nations account for one-third of the world GDP and 70% of the trade. Reserve Bank of India (RBI) governor Urjit Patel said the growth of the Brics countries at 5.1% this year has surpassed global average of 3.1% and also 4% of emerging market economies put together.
On such fears of protectionist policies, Jaitley said he hoped tenor of free trade returns once the heat of the US elections is over.
According to Patel, “The Brexit vote, the US presidential election process, and the political realignment” in Europe were three of the potential “black-swan” scenarios that could impact Brics policies.
The warning against spillovers from global events was similar to the ones made by his predecessor Raghuram Rajan, a former chief economist for the International Monetary Fund widely respected by global investors.
Patel said India had already moved to improve its defences, through “measurable progress” in “price stability, fiscal rectitude, and sustainable current accounts”.
