Economic ministers get cracking from word go
May 27 2014 , New Delhi
Jaitley, Rajan agree on inflation-growth balance
Jaitley, a key member in the cabinet, also committed himself to repairing public finances, particularly the fiscal deficit, which he promised to keep under check along with the current account deficit.
Jaitley has also been given corporate affairs and he will have first-time minister Nirmala Sitharaman as his deputy. Sitharaman has also been entrusted with the portfolio of commerce and industry as minister of state with independent charge.
New telecom and law minister Ravi Shankar Prasad, an important member of Modi’s cabinet, whose portfolios were formally announced on Tuesday, voiced the party’s opposition to retrospective tax amendment that had scared away foreign investors and had not gone down well with industry. He also promised a stable fiscal regime to woo foreign investors
Many ministers, including the prime minister himself, assumed office on Tuesday. Modi, known for his Gujarat model that had modernised his home state to put it on a high growth trajectory, has deviated from the past to streamline the Union cabinet towards a more centralised system of governing.
Several government ministries have been clubbed under one minister, aimed at clearing decision-making bottlenecks, which led to policy paralysis during the previous UPA government, pulling down economic growth.
New textiles minister Santosh Kumar Gangwar pledged to work towards promoting brand India abroad and boosting the country’s textile exports.
The finance minister also held a meeting with senior officials to get first-hand information of ongoing issues and challenges facing the Indian economy, among others.
“A leaner leadership will help to streamline operations and speed up implementation on the ground to get the economy back on its feet,” Singapore brokerage DBS said in a statement, adding that the appointment of Arun Jaitley as finance minister will instill confidence in investors and industry.
It pointed out that to streamline operations, avoid inter-ministerial disputes or duplication of work and promote efficiency, ministries will be merged.
Reacting to the new ministry, British brokerage Barclays said expectations of strong, decisive and swift action have been boosted. It noted that Jaitley is likely to restore confidence in the economy, apart from improving supply-side issues to fight inflation.
With the Narendra Modi government taking charge, real estate players hope the sector will get due priority, which will help bring the economy back to 8-9 per cent growth.
“The merger of housing and urban development departments will ensure coordination and proper control,” confederation of real estate developers’ associations of India (Credai) Lalit Kumar Jain said.
Rating agency Icra, giving a policy prescription, said a consistent roadmap for fiscal consolidation, with clarity on issues such as tax reform, disinvestment and expenditure rationalisation, would free up fiscal space for development and infrastructure spending.
It expressed hope for a balanced approach to agriculture sector policies, to ensure food security and tackle persistent food inflation, adding reviving the investment cycle, to begin with, by ensuring that stalled projects take off as quickly as possible, in addition to simplification of various business and taxation rules and fast-tracking of approvals.
It also seeks clarity on energy reforms, which would encompass the whole gamut of areas including auction of coal blocks, natural gas pricing and distribution reforms.