Finance minister says sustained high growth requires nimble, transparent, coordinated responses, allowing non-state actors to shoulder much more.
A day ahead of the release of quarterly gross domestic product (GDP) numbers, Finance Minister Pranab Mukherjee on Monday said if high growth persisted for the long run, India could lend stability to the world economy and provide a safe bet for floating capital around the globe. He said so on Monday at a function to mark the golden jubilee of the Indian Economic Service.
The economic growth numbers for the first quarter of 2011-12 would be issued tomorrow. While most economists pegged GDP growth in the quarter (April-June) at less than eight per cent, the finance ministry’s background paper had projected 8.4 per cent growth in the first two quarters. The high base of 9.3 per cent GDP growth in the first quarter of 2010-11 could also adversely impact the numbers, analysts said.
Mukherjee said India had reason to be concerned at the downgrading of US credit rating by Standard & Poor’s and the sharp decline in stock prices in Europe. However, he added, these were also markers of the shifting balance in the global economy, presenting new opportunities for us.
Noting that India has global responsibilities of a kind it did not have even 15 years earlier, he said the country’s presence on the ‘high table’ of global policy makers was a matter of pride. “It would have made India’s founding fathers proud...this places huge new responsibilities on our shoulders,” he said.
This would also enable the country to develop faster and spread the benefits of growth to the poor and the marginalised. Mukherjee said India’s robust performance in difficult times showed it could come out stronger from any international financial crisis. “We have to be alert to shape real-time policy responses, reform systems, improve the regulatory framework of our institutions and make the most of the opportunities coming our way,” he said.
In the post-reforms era, the nature and domain of public policy making was undergoing a major transformation, he noted. With the centre of economic activity shifting towards non-state actors in the economy, it was important to re-orient government processes towards greater policy transparency, coherence and coordination across sectors, and between different levels of government, he said.
With the greater role assigned to market forces, there was a need to redesign incentive structures for development and regulation of markets and for improving the quality of governance. It is important to understand that government on its own cannot deliver on every aspect of such a vast economy, underlined the senior minister.
“The government’s role is to create conditions where people are empowered and can help themselves. It has to facilitate private firms and corporations so that they can also shoulder the task of nation building,” was how he put it.
He said there was an urgent need to spread the process of reforms from the Centre to the states and on to the sub-state levels, for harmonising economic policies.
