Selloff slowdown not to hit reforms: World Bank

Michael Carter

World Bank's India chief Michael Carter has welcomed the Common Minimum Programme of the United Progressive Alliance government at the Centre.

Speaking to reporters on the sidelines of a seminar yesterday, Carter also said he did not feel the decision to go slow on privatisation of profit making public sector undertakings would be an impediment to reforms.

"But the government should ensure that there was a strong emphasis on building up competition in those sectors where these public sector companies operated", he added.

The country director of the bank said the key issue for the new government would be maintaining the pace and vigour of reforms. Welcoming the CMP he said it has put emphasis in key social sectors like health in an "inclusive way".

There have been announcements that the government would like to increase expenditure in health and reallocate other areas of expenditure, but added that the priorities must also include a reduction of the fiscal deficit. "It will be interesting to see how the budget does the balancing exercise", he said.

The CMP has said that the revenue deficit of the government would be eliminated by the year 2009. It has however not made any commitment on the reduction in fiscal deficit. Instead finance minister P Chidambaram has said that he will work to expand investment in the economy.

Refusing to hazard a guess on the possible rate of growth of the Gross Domestic Product in 2004-05, Carter said the long term growth rate of the economy would not dip below the 6 per cent mark soon.

He also said that the worst of the international oil shock was probably over. For the domestic economy the impact should not be heavy, he added.

He felt a competition for the profit making public sector companies could give the same impetus to reforms as their outright disinvestment.

He acknowledged that in the sale of the loss making companies, the pricing would be a critical factor to make the process a success. Carter was earlier addressing a seminar organised by the World Bank and the ICRIER on Global Development Finance, 2004.