Reforms need political backing, risk-taking: PM
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As the ruling UPA's policies over the years are blamed for the country's economic woes and a general feeling of gloom, Prime Minister Manmohan Singh Wednesday said reforms must be backed by strong political support to succeed and push growth.
Singh's comments came a day after the Reserve Bank of India scaled down India's GDP growth projection for 2013-14 to 5.5 per cent from its initial estimate of 5.7 per cent, citing the need for "policy efforts...including the need for upward revisions in administered prices of petroleum products".
Singh said academic economists who have written about economic reforms in India tend to see the process as an acceptance of technical recommendations which have long been advocated by economists. "However, reforms don't happen just because there is a professional consensus. They happen when the political leadership of the time decides to back these initiatives," the Prime Minister said at a function to release a book of essays in honour of Finance Minister P Chidambaram.
"In a democracy, reform - be it of economic policy or of institutions - is essentially a political process. We have to build a sufficiently wide political consensus in favour of the policies we wish to adopt. Having a parliamentary majority alone is not enough, because there are differences within parties," Singh said. "For reforms to be credible it is necessary that a wide cross section of society should understand the need for and accept the policy changes that a government wishes to introduce."
He said the reason India grew fast through the last decade was that the economy had absorbed the full benefit of the reforms that began in 1991. "Our growth rate has slowed down to 5 per cent in 2012-13. But this should not make us feel disheartened and imagine that we have slipped back to our old growth path," he sought to reassure.