Reforms to continue, 8%-plus growth likely by 2010-11: FM

Reforms to continue, 8%-plus growth likely by 2010-11: FM
The Financial Express, August 28, 2009, Page 2

fe Bureaus, New Delhi

A day after the finance minister Pranab Mukherjee said the government had no more room for fiscal stimulus, he told industry that the Centre was working on economic reforms that will lead to greater mobilisation of resources. The minister also expressed hope that the economy could return to over 8% growth in 2010-11.

“There is a possibility (of over 8% growth) if there is no further adverse situation over which we have no control,” he said at a Ficci meeting on Wednesday.

Commenting on a road map for economic reforms, he said, “Economic reforms are a continuing process and have been going on since 1991. The Direct Taxes Code and the Goods and Services Tax (GST) are a part of tax reforms. Disinvestment and investment in critical sectors are part of economic reforms,” Mukherjee said.

The Centre would pursue reforms that would lead to greater mobilisation of resources in the financial sector, the minister said. These will include reforms in the corporate bond market, setting up an autonomous Debt Management Office (DMO) and a new Bankruptcy law.

The UPA with a larger mandate in its second term is expected to carry forward its agenda of economic reforms, which were stalled because of its Left allies. Apart from reforms in the banking sector, it is expected to table the Pension Fund Regulatory Development Bill and increase FDI in insurance to 49%. In the corporate debt market, it is expected to introduce repos or repurchase agreement, a transaction that allows a holder to sell a bond for a short period to another investor with an agreement to buy it back at a higher price at a later date. Presently, repos are allowed only in the government bond market.

Emphasising that the deviation from the fiscal deficit targets is ‘only temporary’, the minister also said the Centre would reduce both its fiscal and revenue deficit.