Crony Capitalism Allegations Were True: Arun Jaitley
Finance Minister Arun Jaitley on Wednesday said that allegations of crony capitalism against the previous government harmed India's image globally as the spectrum and coal block allocations became defining moments against the country.
"Allegations of crony capitalism were true (under last government). Element of fairness in the system was lacking," Mr Jaitley said at the World Economic Forum's India Economic Summit in Delhi.
The finance minister also conceded that the retrospective tax amendment done by the UPA government was a bad idea and it damaged India's economy. India had fallen off global radar over last 2-3 years, he added.
However, Mr Jaitley voiced optimism that the measures initiated by the government will soon show results. Citing the example of the recent coal ordinance, he said the new government has removed the element of discretion in the hands of the state.
In good news for investors, Mr Jaitley expressed hope that the amended Insurance Bill will be passed in the next session of Parliament. He also said that the government will relook at some aspects of Land Acquisition Law. Its cumbersome procedure has often been cited as one of the impediments to make India a manufacturing hub. (Read)
However, those looking for big bang reforms will likely be disappointed, with the finance minister stressing that reforms are not about one sensational idea. Stressing that it is difficult in a country like India to market reforms, Mr Jaitley said, "Reforms in developed society are different because people there have already tasted fruits of development. In a country where a very large number of people are so poor, for governments to push reforms is far more challenging."
On the key labour reform, he said the government will need to build a consensus. India's stringent labour laws have been a sore point with foreign investors. As far as subsidies are concerned, Mr Jaitley said they cannot be eliminated altogether but there is scope for its rationalization. Subsidies account for over 2 per cent of India's GDP.
The government last month announced measures such as decontrol of diesel prices and gas price hike. Indian stock markets have jumped to record highs on hopes of further reform announcements.