Pending reforms may get back on track next year

"We have become satisfied. Everyone is assuming that India will grow at 9% forever even if there are no reforms," says a senior official in a key ministry. The economy might be growing at nearly 9% but scratch the outside and you see some stress points building up. Inflation remains high and investment seems to have slowed down. Foreign direct investment is nearly 25% lower than last year. Officials say the lack of reforms has a role to play.The Indian financial system will enter 2011 with a bag full of pending economic reforms, and analysts say the government must build political agreement to implement at least of some of the key measures in order to add further momentum to the economy.

Policymaking virtually came to a standstill this year as the government spent considerable time in fighting off allegations of corruption in a string of scams. The Winter session of Parliament was a washout as the Opposition stepped up its demand for a JPC probe into the 2G Spectrum allocation scam. Only two Bills were approved by Lok Sabha and none were cleared by Rajya Sabha.Despite the policy paralysis seen in recent months, economists say they expect the government to move on reforms that will have impact on faster completion of infrastructure projects and help sustain the growth momentum.

They maintain that the government needs to move ahead next year with inward looking policies that will channelize savings to the infrastructure sector as the global economic recovery was still fragile."We expect effective implementation , funding and execution of infrastructure projects which will support the growth momentum," Shubhada Rao, chief economist at Yes Bank, said.The loud triumph of the Congress-led coalition in 2009 had raised hopes of faster financial reforms due to the presence of the dream team of reformers. PM Manmohan Singh had promised to build political agreement needed for legislative actions to ensure decisive change in the pace of the country's progress to become a leading economy in the world.


Post a Comment