New York – Nearly a year after Arun Jaitley rang the closing bell at the New York Stock Exchange (NYSE) on June 17, 2015 and also toured the trading floor of the world’s largest stock exchange, the Indian Minister of Finance, Corporate Affairs and Information & Broadcasting, Government of India sounded much cautious and subdued in his remarks.
“Compared to the situation earlier and in the current global context, India is doing a lot better on all fronts, especially on the key economic parameters, however, there is scope to do better,” said Jaitley at the Conference on “Make in India: The New Deal” in New York, organized by the Confederation of Indian Industry (CII) and the Asia Society Policy Institute.
On India’s position in the light of expanding trade pacts like the Trans-Pacific Partnership (TPP) and the Asia-Pacific Economic Cooperation (APEC), Jaitley said, “With a much larger economy, I think Indian confidence in terms of dealing with other countries in terms of trade has also significantly increased. The India of 2016 is going to be significantly different from the India of the early 1990s,”
Accepting earlier weaknesses, Jaitley stated, “We weren’t strong enough to trade freely. Over the last two decades a lot of water has flown. We have become a large economy, we positively interact with bodies of other nations.”
Elaborating on Indian protectionism, Jaitley said, “I can tell you that developing economies being protectionist is much less worrisome (than) when (in) the most developed countries you hear noises of protectionism.”
“Trade is one area where every country watches its interests and that’s a freedom we allow to each other,” he noted.
Elaborating more on the subject, Jaitley said, “Low commodity prices have hurt some people and helped some people. Low oil prices have helped some people, it has hurt some people,” adding, “Each one is trying to put firewalls around their own system so that within the limitations how best you can save yourself from the slowdown and grow within the limitations that the world has created for you.”
Labeling the global economic situation as “grim,” “worrisome” and “challenging,” Jaitley said, “What will be the state of play a year or two years from now, I don’t think anybody has been able for sure to hazard even a significant guess.”
On a question about dealings with powerful competitor and neighbor China, Jaitley sounded optimistic, “As far as the economic relationship (between India and China) is concerned, that is significantly improving almost by the day.”
“You have two very large economies in the region where trade is picking up, trade issues are sorted out, investments are taking places,” he said.
Finance Minister Jaitley, an integral part of Prime Minister Narendra Modi’s administration was upbeat on the reforms happening in India saying that structural changes are underway, which would place the economy and the country in a stronger footing as one of the leading economies of the world.
He referred in particular to key reforms including opening up FDI in multiple sectors; reduction in the corporate tax rate, movement on GST, lowering of interest rates as well as process reforms with an emphasis on ease of doing business that can help decrease transaction costs.
Jaitley also pointed out that for the first time, the discourse about reforms is changing in India with a larger constituency being in support rather than against.
Speaking earlier in the session, Shaktikanta Das, Secretary, Economic Affairs, Ministry of Finance pointed out that India was becoming more competitive – not owing to labour cost arbitrage but owing to lower costs of capital, lower taxes, lower logistics costs, etc.
Arun Kumar Singh, the soft-spoken Indian Ambassador to the US, spoke about the fact that economic security and strategic partnership have become an integral part of the bilateral relationship between India and the US. He also highlighted that US investments have been to the tune of USD 28 billion and likewise Indian companies have invested USD 15 billion in the US and created over a hundred thousand jobs.
The event was co-chaired by Kevin Rudd, President, Asia Society Policy Institute and Naushad Forbes, President, CII.