No let up in economic reforms: Mukherjee

MUKHERJEE-REFORM
From Lalit K Jha
Washington (PTI) - Indian Finance Minister Pranab
Mukherjee on Monday strongly refuted observations by US think-
tanks, the government and industry that India has gone slow on
economic reforms and insisted that a series of reforms are in
the process, which will lead to the next round of growth.
However, Mukherjee observed that reforms in India require
political consensus, which is being worked upon by the
government led by Prime Minister Manmohan Singh.
Reform is a continuous process and the UPA government is
committed to it.
"The more you reform, there is the need for additional
reform," he argued addressing a meeting of India and American
corporate leaders, policy makers and think-tank members at a
conference on the 'US-India Economic and Financial
Partnership' jointly organised by the Confederation of Indian
Industry (CII) and Brookings Institute, a Washington-based
think-tank.
"We have taken certain steps, as I was talking of
structural reforms," said Mukherjee, who arrived in Washington
on Monday leading a high-powered Indian delegation for the
second India-US Economic and Financial Partnership discussions
being held here.
"We have recently finalised the guidelines of the debt
bonds. We have also decided that... FDI to be more
user-friendly (and) all prior regulation and guidelines have
been consolidated into one comprehensive document which is
reviewed every six months. This has been done with the
specific intent of enhancing clarity and predictability of our
FDI policy to foreign investors," he said.
"Ownership and control is now central to the FDI policy
and the methodology in this regard has been clearly defined.
Discussions are currently underway to build consensus on
further liberalisation of the FDI policy," he said.
Certain important legislations for reform of banking
regulations, enhancement of FDI in the insurance sector and
pension fund regulation were introduced in the last session of
Parliament, he said, hoping that it would be possible to get
these legislations cleared expeditiously by Parliament.
"But I was mentioning to Secretary Geithner that in our
system, we ought to have the consensus from the other parties,
because we do not have the simple majority to get the laws
passed in our Parliament.
"The talks to develop a consensus are going on and I do
hope it will be possible. With the help of the parties
concerned, we would be able to get these legislations passed,"
Mukherjee said.
In the areas of taxations, New Delhi, he said, has
undertaken two major reforms.
"In direct taxes, it is under the scrutiny of the
parliamentary standing committee and I do hope that from the
next financial year, we will be able to operationalise it," he
noted.
"With respect of another reform, Goods and Services Tax,
(on) which we are trying to evolve a consensus, because of our
constitutional practice, these are areas of taxation which the
Constitution has authorised the federal and provincial
governments to enforce taxes on certain items. Unless the
states agree and a constitutional amendment is introduced and
passed, this is not possible to make it effective," he said.
And for that constitutional amendment, the central
government requires a special majority and concurrence of 50
per cent of the provincial government.
"Therefore, the consensus among the major political
parties is absolutely necessary. It would be a very important
reform if we are able to get this legislation passed.
"We are working on that and if we are in a position to
get this legislation passed, to my mind it will be a major
reform," he said.
Certain important legislations for reform of banking
regulations, enhancement of FDI in the insurance sector and
pension fund regulation were introduced in the last session of
Parliament, he said, hoping that it would be possible to get
these legislations cleared expeditiously by Parliament.
"But I was mentioning to Secretary Geithner that in our
system, we ought to have the consensus from the other parties,
because we do not have the simple majority to get the laws
passed in our Parliament.
"The talks to develop a consensus are going on and I do
hope it will be possible. With the help of the parties
concerned, we would be able to get these legislations passed,"
Mukherjee said.
In the areas of taxations, New Delhi, he said, has
undertaken two major reforms.
"In direct taxes, it is under the scrutiny of the
parliamentary standing committee and I do hope that from the
next financial year, we will be able to operationalise it," he
noted.
"With respect of another reform, Goods and Services Tax,
(on) which we are trying to evolve a consensus, because of our
constitutional practice, these are areas of taxation which the
Constitution has authorised the federal and provincial
governments to enforce taxes on certain items. Unless the
states agree and a constitutional amendment is introduced and
passed, this is not possible to make it effective," he said.
And for that constitutional amendment, the central
government requires a special majority and concurrence of 50
per cent of the provincial government.
"Therefore, the consensus among the major political
parties is absolutely necessary. It would be a very important
reform if we are able to get this legislation passed.
"We are working on that and if we are in a position to
get this legislation passed, to my mind it will be a major
reform," he said.

"Another important reform we have decided to introduce is
the mutual funds to directly attract investment from foreign
investors who meet the KYC guidelines, Know-Your-Plans
guidelines with a view to facilitate investment opportunity in
India. Earlier, these windows were available only to foreign
institutional investors," he said.
"Along with these in two stages, the ceiling for
investment by FIIs into corporate bonds has been increased
from the existing USD 15 billion to USD 40 billion.
The Indian Finance Minister said during the next five
years, the infrastructure requirement would be up to the tune
of USD 1 trillion, 50 per cent of which would come from the
private sector.
"Naturally, we do expect that (given) these various
measures including the PPP project and the recent guidelines
which we have issued for the debt funds, it would be possible
for the private sectors to come and make investment.
"In order to make PPP projects successful, we are
providing support through a viability funding mechanism, which
is quite attractive," he said.