India’s confidence level in dealing with other countries economically has risen and it is now in a position to boldly consider multilateral trade arrangements as it has emerged as the fastest-growing major economy amid a “grim” global situation, according to Finance Minister Arul Jaitley.
India once had “fears” about trade agreements, he said Monday at the Asia Society here in answer to a question about India’s attitude to the the Trans-Pacific Partnership (TPP). The trade pact is to bring closer together the economies of 12 nations stretching from New Zealand to Chile along the Pacific rim and include the United States. India is not in consideration for joining the pact, which has become controversial in the US because of fears of competition from further opening its markets.
Developed countries going to protectionism is what is worrisome, Jaitley added.
Highlighting India’s emerging strength in the global economy, India’s ambassador to the United States, Arun Kumar Singh, said that in economic cooperation between the two countries, investments and job creation now went both ways. Indian companies had invested over $15 billion in the US and created about 100,000 jobs.
Jaitley agreed with former Australian Prime Minister Kevin Rudd who said he had noticed that in India the language of discourse about the economy had shifted away to discussions of the regulatory environment, growth and role of manufacturing. Rudd, who is now the president of the Asia Society Policy Institute and presided over the meeting, mentioned it as a sign of the maturing of the Indian economy and society.
Commenting on Rudd’s observation, Jaitley said the sections of society that support economic reforms are now bigger than those that oppose them.
India’s “competitive federalism” was helping speed up the pace of and change in attitude to reforms, he said. On the mainland all the states had turned revenue surplus except for the leftist states of Kerala and West Bengal, Jaitley said. But now even those states were coming on board with Kerala developing a private port and West Bengal wooing global investors.
Although the global economic slowdown was hurting Indian exports, India’s own economy was doing well overall, he said. But at the same time, it could do better in regard to poverty reduction and industrialisation, he conceded.
The BJP government’s “New Deal” of Make in India was born of the need to alleviate the stress caused to the Indian economy with about 50 percent of the population working in the agriculture sector and the need to shift them away from it, Jaitley said.
He outlined the various measures taken by the government to help bring in investments for its Make in India policy, such as speeded up and transparent decision-making, reducing the discretionary element and giving a role for the market forces, and changes in taxation policy, while at the same time heavily investing in the infrastructure.
Economic Affairs Secretary Shaktikanta Das said that for Make in India, the nation wanted to offer a low-cost manufacturing environment, but this did not mean low wages. The low-cost structure would be achieved through lower financial costs, lower transaction costs, lower taxes, better logistics through infrastructure improvements, and an efficient bond market, he added.