Delay in reforms, inevitable in coalition govt: FM
However, to boost business sentiment, the government has taken major initiatives like the new investor-friendly manufacturing policy, liberalisation of inflows in the capital market and easing of the rules for the companies to raise funds overseas, he said. Significantly, Mukherjee said, "Discussions are also underway about decontrolling some of the administered fuel prices".
Addressing a press conference after taking over as Chairman of the Board of Governors of the Asian Development Bank, he shared concerns among a section of the industry and investors over delays in decision-making.
Several key reforms like liberalisation of the voting rights in banks, hiking foreign direct investment (FDI) in insurance and allowing it in the multi-brand retail have been pending for long.
Some of the allies of the ruling UPA coalition have been opposing FDI in retail and other reforms. "Yes, there has been some delay in some of the crucial legislations, but when you run a multi-party coalition government and when the electorate gives a fractured mandate which limits the powers of the executive…with the mandate that you have to carry others with you…your own views or your own ideas are not adequate unless you carry others with you," Mukherjee said.
Although it is time-consuming and at times to "the point of almost frustration", it is lasting, Mukherjee said, adding that since the economic reforms began in 1991, there is a commitment among the political parties on liberalisation.
Asked about the perception among some of the global rating agencies on India, Mukherjee said they would have captured the mood and other parameters at a particular point of time, but the economic situations keep changing, like it improved in the US.
Last month, global credit rater Standard and Poor`s had lowered the country`s sovereign rating outlook on account of fiscal situation.
Mukherjee said the government is committed to addressing important issues like increase in fiscal deficit. "On the fiscal front, we are committed to bring down the subsidy bill below 2 per cent of the GDP in 2012-13. Discussions are also underway about decontrolling some of the administered fuel prices," he said.
Citing strong fundamentals and hopes of revival in business confidence, Mukherjee said the Indian economy would return to the pre-global crisis growth path in the coming years. "…strong fundamentals of our economy will help us return to a sustained growth path of pre-2008 crisis level in the coming years," he said.
India was growing at over 9 per cent before the global financial crisis of 2008 pulled down the growth rate to 6.7 per cent in 2008-09. India has projected a growth rate of 7.6 per cent in 2012-13, up from 6.9 per cent recorded in the previous fiscal.
Mukherjee said that despite the impact of euro-zone debt crisis on the economy, "India has continued to be a front runner in terms of economic growth in the region, which underlines the resilience of the Indian economy. "The Indian economy is more resilient than many other nations to withstand this fresh round of global economic turmoil, as the bulk of India?s GDP is domestic demand driven," he added.