Press Information Bureau

Government of India

Ministry of Finance

22-May-2012 19:31 IST

Economic reforms which began in 1991 in the wake of a crisis in balance of payments was focused on macroeconomic stabilization and structural reforms. The macroeconomic outcome subsequent to economic reforms in the form of high growth, relative stability and resilience owe in large measures to the reform process.

Reforms are an ongoing process and a number of initiatives have been taken in the last three years. In fiscal policy, which seeks to resume mandated fiscal consolidation, to obviate the main risk of overshooting of subsidies, the Budget for 2012-13 has announced the endeavor to restrict expenditure thereon to under 2 per cent of GDP. This would be facilitated by the move towards nutrient based subsidy in fertilizers and the use of unique identity based ‘Aadhaar’ system for rationalizing subsidies. Steps have been taken for expediting the passage of Direct Tax Code (DTC) Bill and evolving a consensus among stake holders in implementation of goods and services tax. A National Manufacturing Policy with the objective of raising, within a decade, the share of manufacturing in GDP to 25 per cent and creation of 10 crore jobs has been announced. A number of legislative measures/amendments are being taken up in this session of Parliament as part of financial sector reforms. With a federal structure and vibrant multi-party democratic polity, reforms in India have been made possible through the process of dialogue and consensus with the different stakeholders. While some stake holders might be desirous of a fast paced reform process, reforms are possible only with broad based agreement after dialogue and discussions. Irrespective of political differences, the Central and State Governments have worked together for furthering reforms. Thus while reforms in India may be gradual, it is sure and has larger democratic sanction.

The Chief Economic Adviser (CEA) had clarified that the report attributed to him in this regard are not accurate through a separate press release issued by Press Information Bureau on April 20, 2012.

This information was given by the Minister of State for Finance, Shri Namo Narain Meena in written reply to a question in Rajya Sabha today.

DSM/Hb

Fiscal consolidation via subsidy rationalization and Aadhaar targeting to support tax and manufacturing policy reforms. Fiscal consolidation is prioritised by seeking to restrict subsidy expenditure through a shift to nutrient-based fertilizer subsidies and Aadhaar-based unique identity targeting to rationalise subsidy delivery, alongside measures to expedite the Direct Tax Code, build consensus on a Goods and Services Tax, pursue financial sector legislative reforms, and implement a National Manufacturing Policy to boost manufacturing and employment.