Sending a stern message to states to pursue reforms, finance minister Arun Jaitley said either they should “reform or perish” as investors do not like an environment of policy paralysis or uncertainty.
“Those who don’t reform, those states are going to be at a disadvantageous position and those who are in a position to offer a more favourable business and political environment to the investors, certainly those states are going to benefit. Reform or perish couldn’t be more true than it is today. The investors are not philanthropists, they are business people and for every dollar or rupee of investment that they make, they will weigh each possibility, they will take each factor into consideration which they will include in their investment decisions and therefore if there is an environment of paralysis or uncertainty, policies are not reforming, investors won’t be enthused to invest,” Jaitley said at the Happening Haryana Global Investors Summit.
Referring to the recent agitation by Jats in Haryana to demand reservation, which caused huge losses to businesses in the state, Jaitley said “dark clouds are over” and the state of Haryana should consider more investments for more townships, more highways and more educational institutions.
“When social challenges emerge, they emerge because of inequalities. Therefore, development that is taking place in one part of the state, should also be addressed in other parts of the state. Network of educational institutions in those parts of the states also has to be expanded,” he said.
He further added that Haryana has geographical advantage of being close to the national capital, and hence, can attract more investments.
“More investment has one great advantage, it leads to further investment. Therefore in this competitive environment of cooperative federalism, every other state is vying for investment. I personally do feel that Haryana with several geographical and advantages can lead the growth,” he said.
Haryana’s chief minister Manohar Lal Khattar said the state had set investment target of Rs 1 lakh crore while planning the investment summit last year.
“The investment commitment so far has already exceeded by 200 per cent of this target,” he added.
Highlighting the importance of investment as the starting point of economic activity, which thereby leads to creation of jobs, Jaitley said investments will suffer if decision making is slow. Predictability of policy, the overall attitude of the government, ethics and integrity have to be high on the agenda of state governments, otherwise the investments will suffer, Jaitley said.
Emphasising on competitive federalism, Jaitley said the states need to compete with each other to attract investment in addition to practicing “cooperative federalism”.
“In addition to cooperative federalism, India has also become a competitive federalism. The future would be competitive federalism because it’s not Centre or state relation but it is states and states competing with each other in order to attract investment,” he said.