New Delhi: Finance minister Arun Jaitley on Friday told a gathering of industry executives that they should not be distracted by high-pitched political rhetoric in the run-up to 2019 Lok Sabha elections and defended the Narendra Modi government in the standoff with the Reserve Bank of India (RBI) over its management of the financial system.
Addressing an annual gathering of industry body Federation of Indian Chambers of Commerce and Industry (Ficci), Jaitley said India needs to have stability in the direction of reforms and policies if it had to accelerate economic growth rate from the 7-8% range.
The finance minister’s emphasis on stability comes in the wake of opposition Congress winning the assembly elections in Rajasthan, Madhya Pradesh and Chattisgarh, three of the five states that went to polls recently.
“India needs stability of policies to continue because we have a lot to catch up," said Jaitley.
The finance minister also emphasised the need for continuous reforms over the next two decades to make India one of the top three economies in the world and eventually become a developed nation.
One factor which could make or mar that journey, he said, is the quality of public discourse—such as the one seen on the issue of RBI autonomy. Jaitley defended the government’s move to bring to the RBI’s notice issues that affected liquidity in the market, saying it was raising these issues at an appropriate forum.
“Of course, the government respects the autonomy and independence of the central bank. That is precisely why we flagged these issues… How can a sovereign government bringing to the notice (of the central bank) the problem of credit and liquidity anyway infringe on its autonomy?" said Jaitley.
A bruising standoff between the RBI and the finance ministry in recent months over easing of liquidity in the market and the transfer of RBI’s excess reserves to the exchequer has resulted in a change of guard at the central bank this month with Shaktikanta Das replacing Urjit Patel as governor.
“We need to improve the liquidity system so that we do not manufacture a problem for ourselves," said the minister, adding that successful industries like telecom and civil aviation cannot be allowed to become problem areas in the economy.
The Modi government, which will face national polls early next year, is keen to improve access to credit, improve private investments and create more jobs.
It was important to have a decisive leadership for pursuing reforms, which Jaitley said was not possible by “fragile coalitions". The minister said that reforms could be pursued in areas where political challenges have hindered it so far.