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Comment on reforms not linked to 2014 election: Kaushik Basu

Delhi,Business/Economy, Fri, 20 Apr 2012 IANS

New Delhi, April 20 (IANS) Government's chief economic advisor Kaushik Basu Friday clarified that his comments on economic reforms getting a push after 2014 was not linked to India's general election but to a "possible European crisis".

 

"At the Carnegie lecture, the gist of my argument was that 2014 was an important year because numerous European banks would have to begin to repay $1.3 trillion worth of loans that they had received from the European Central Bank," Basu said in a statement.

 

"Some of this was reported on poorly, juxtaposing my comments on Europe in 2014 with the Indian election of 2014. This is unfortunate, because the central message of my talk was the possible European crisis of 2014 and India's major rise thereafter, likely overtaking China," he said.

 

Basu was quoted as saying in a section of media that major economic reforms were unlikely till 2014 because of the general election.

 

His comment at Carnegie Endowment for International Peace, in Washington Thursday, sparked a political storm in the country.

 

Basu said the opinion expressed by him at the meeting in Washington was his personal and it should not be seen as that of the government.

 

"This is one of the strengths of India that it allows us to generate and discuss new ideas without the government having to first endorse them," he said.

 

Basu argued that huge repayment of loan by European banks could result in third round of economic crisis after 2008 and 2011.

 

"But soon after the possible European crisis of 2014, we could see India as the world's fastest growing economy, faster than even China," he said.

 

Finance Minister Pranab Mukherjee's top advisor admitted that there was slowdown in economic reforms and decision-making in recent years due to coalition politics.

 

"I specifically mentioned that the problem with the Goods and Services Tax (GST) reform was that the opposition realised this is a good reform. Therefore, it was reluctant to let it happen under the current regime," he said.

 

"A single-party majority government would not face this problem. If there is a single-party majority in the next election, that will facilitate such reforms. I argued that some reforms, such as FDI in multi-brand retail, were likely to happen sooner because in principle they did not need the support of the opposition; and this will give a boost to the mood of the economy," Basu added.

 


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