New Delhi: Finance minister Arun Jaitley said the rise in protectionism across the globe will hurt the world economy and welfare of people.
“We need to bond together and renew our compact to protect the world from falling into a spiral of slow economic growth, rising inequality and irreversibly altered climate, conflict and fragility," Jaitley said in Washington DC. He was speaking at the plenary meeting of the development committee of the World Bank and the International Monetary Fund and Restricted Session of the International Monetary and Finance Committee (IMFC).
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India has expressed concern over the rising trend of developed countries like the US, Australia and New Zealand putting curbs on the movement of skilled professionals. That primarily puts Indian technology companies that send thousands of computer programmers and consultants from India to work at client sites abroad in the cross hairs, hurting their ability to serve customers and win orders.
Jaitley said the confidence in a global recovery remains weak owing to the risks associated with the future course of economic policies and the monetary policy stance of advanced economies; the resurgence of commodity price pressures; and the increasing recourse to protectionism.
During his visit to Washington, Jaitley held a bilateral meeting with his US counterpart and the US treasury secretary Steven Mnuchin. “Jaitley raised the issue of H-1B visas for skilled professionals from India and highlighted the contribution which Indian companies and professionals are making to the US economy. Issues related to terror funding were also discussed and the US treasury secretary appreciated the role of India in this regard, including Indo-US cooperation in FATF (Financial Action Task Force)," a finance ministry statement said.
Speaking at the IMFC, Jaitley said the positive momentum in global growth is expected to strengthen in 2017 based on gradual improvement in economic conditions in advanced economies, particularly the US, as well as due to the pick-up in growth in some large emerging markets.
“In these circumstances, it is imperative to fortify efforts to support global recovery by committing ourselves to growth-friendly policies and ensuring free and fair trade practices as called for by G-20 leaders at the Hangzhou Summit in September last year. Advanced economies have an important role in stimulating global demand with supportive fiscal and monetary policies and eschewing protectionism," Jaitley said.
Jaitley on Friday had projected the Indian economy to grow at 7.5% in 2017-18, up from 7.1% in the previous year as estimated by the statistics department.
The finance minister cautioned that emerging market and developing economies (EMDEs) are vulnerable to external shocks and must take ample caution to safeguard ongoing economic recovery. “Structural reforms and building buffers constitute the keystones of policy agenda in EMDEs that would ensure sustained growth. Improving the flexibility of labour markets and increasing competition in factor and product markets along with incentives for skill building and innovations are important structural efforts required for boosting productivity and potential growth," he said.
Speaking on recent developments in India, Jaitley said that while Indian banks are adequately capitalized, the government is “deeply aware of the problem of non-performing loans (NPLs) which are in the process of being effectively resolved".
“Policies for resolution of NPLs including optimal structuring of credit facilities, change in ownership/management, deep restructuring of stressed assets and facilitation of speedy exit from unviable accounts have been put in place. Additionally, the amendments to debt recovery laws as well as the enactment of Insolvency and Bankruptcy Code 2016 would provide enabling infrastructure to deal effectively with the recovery of non-performing assets in a time-bound manner," Jaitley said.