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Manmohan lays down reforms road map

Special Correspondent

Assures corporate honchos of a transparent, corruption-free environment

Photo: PTI/Manvender Vashist

SETTING THE AGENDA: Prime Minister Manmohan Singh with Commerce and Industries Minister Anand Sharma, Chairman of the Prime Minister's Economic Advisory Council C. Rangarajan, industrialists Ratan Tata and Azim Premji, among others, at a meeting of the Prime Minister's Council on Trade and Industriy in New Delhi on Thursday.

NEW DELHI: Prime Minister Manmohan Singh on Thursday laid down the United Progressive Alliance government's road map for financial sector reforms and infrastructure development and assured corporate honchos of a transparent and corruption-free environment to tackle the challenges facing the economy with confidence and without any fear or apprehensions.

Chairing the second meeting of Prime Minister's Council on Trade and Industry, Dr. Singh listed the steps taken relating to enunciation of public procurement standards, formulation of a public procurement policy, review and abolition of discretionary powers enjoyed by Ministers, and introduction of an open and competitive system for the use of natural resources.

Dr. Singh said:

“I am aware of the nervousness in some sections of the corporate sector arising out of some recent unfortunate developments. We stand committed to ensuring that our industry moves ahead with confidence and without fear or apprehension.

“The government is committed to improving the quality of governance. We are considering all measures, including legislative and administrative, to tackle corruption and improve transparency.

“Comprehensive steps have been taken to strengthen the intelligence and implementing institutions to combat the menace of black money and rein in corruption.”

The Prime Minister's candid statement was evidently in response to an ‘Open letter' to political leaders by leading corporates such as Azim Premji, Keshub Mahindra and Deepak Parekh, in which they expressed serious concern over a series of scams leading to “governance deficit.”

“We are alarmed at the widespread governance deficit almost in every sphere of national activity covering the government, the business and the institutions. Widespread discretionary decision-making have been routinely subjected to extraneous influences,” the letter said.

At the meeting attended by corporate stalwarts such as Ratan Tata, Rahul Bajaj, Mr. Premji, K.M. Birla, Mr. Parekh, Jamshyd Godrej, Chanda Kochhar and other members of the Council, Dr. Singh assured them that economic and financial sector reforms would continue.

“Wherever I meet representatives from our industry and businesses, the question I am most often asked is whether economic reforms will continue. You should have no doubt on this score. The economic reforms of the past have brought us advantages and I can assure you that we will continue travelling on this path. We might do it gradually, and in a manner which builds a consensus for economic and social change. But I assure you that we will persevere,” Dr. Singh said.

Tax reforms

The Prime Minister pointed out that while tax reforms, especially the introduction of a Goods and Services Tax, were a very important part of the government's agenda, so was financial sector reforms.

“We are also committed to major reforms in education and skill development… Legal reforms aimed at reducing delays are another key priority,” he said.

On the financial sector, Dr. Singh stressed the need for developing long-term debt markets and to deepen corporate bond markets, which in turn required strong insurance and pension sub-sectors.

“Some of the reforms needed, especially in insurance, involve legislative changes. We have taken initiatives in this area and will strive to build the political consensus needed for these legislative actions to be completed. We need to improve futures markets for better price discovery and regulation. We also need to remove institutional hurdles to facilitate better intermediation,” he said.

New challenges

Dr. Singh reminded the meeting of the new challenges owing to an increasingly open engagement with the world economy.

“We need to deal effectively with the consequences of rising oil, food and commodity prices, political upheavals in many countries and unprecedented natural disasters in various parts of the world,” he said.

“In recent months, inflation and food inflation in particular, has been a problem. We want to deal with it in a manner that the growth rhythm is not disturbed. I believe we have pursued prudent fiscal and monetary policies to strike the right balance between growth and inflation. I am hopeful of seeing lower levels of inflation in the coming months,” he said.

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