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In his first public statement after the Delhi poll results, Finance Minister Arun Jaitley stressed on Thursday that the Bharatiya Janata Party's humbling defeat will not slow down reform measures and that the Narendra Modi government is determined to go ahead on the path of economic reforms.
"We believe the kind of reforms we have undertaken is certainly going to bring in investment generate jobs, improve the quality of life of people and also help us in alleviating poverty level. The fact that four elections have been won and one has not been won is absolutely no ground for believing that there will be any slowdown on the path on which we have undertaken," Jaitley said at a joint press conference with the US Treasury Secretary Jack Lew.
In the 2014 Lok Sabha elections, When the BJP romped home with a decisive majority, many viewed it as a victory of the right-leaning economic thought, with its emphasis on free market capitalism, higher private spending, cubed subsidies and lower tax rates, over the left-of-centre school of thought, market by welfare schemes, increased subsidies and other populist measures, and massive government spending.
Now, with Aam Aadmi Party promising cheap electricity and free water, amongst other things, the debate has begun about whether the central government would resort to populism in the wake of electoral reverse.
Jaitley is scheduled to present his first full budget for 2015-16 on February 28 which among other things will unveil government's strategy to boost economic growth.
Jaitley and Lew met under the 5th Indo-US Economic and Financial Partnership meeting and discussed a broad range of issues, including the global macroeconomic situation, financial markets, taxation issues, banking sector, global money laundering and terror funding.
Jaitley said there were also discussions about India becoming part of Foreign Account Tax Compliance Act (FATCA), which will lead to automatic exchange of information between two countries regarding their citizens holding financial interests in each others' jurisdictions. He added that the Indian economy has emerged from challenges, and was now in a position to take off at a much faster pace.
The minister said that the government remained committed to attracting foreign investment for infrastructure projects as well as manufacturing. He said that the steps India had taken to ease the process of doing business was also discussed.
Lew, on his part, praised the recent initiatives taken by the government.
"The Modi government has taken steps to reduce fuel subsidies, allowing the government to continue reducing deficits while providing the fiscal space to make investments that will boost growth and raise employment.," he said.
He said that India and the US were increasing cooperation in a number of important areas such as strengthening of the financial sector, resolving tax disputes, combating illicit finance and facilitating long term investments through deepening of capital markets in India.
"Additional reforms are necessary and increase in public investment combined with a more open investment climate and a deeper financial sector would help attract private infrastructure investment (to India),\" he said.
