With increasing protectionist tendencies in the developed world posing a threat to the world economy, Finance Minister Arun Jaitley Thursday called for an aggressive push to domestic reforms, saying this could, to a considerable extent, neutralise the impact of the global slowdown.
Speaking at a BRICS seminar on investment flows ahead of the 5-nation summit in Goa this weekend, Jaitley warned that growing populist backlash against globalisation and free trade could have an adverse effect on the global economy.
Highlighting two examples — Britain’s vote (Brexit) to leave the European Union as well as an aggressive campaign against trade deals in the US presidential election — the Finance Minister said “part of the developed world is moving towards protectionism. If developing countries see a trend of protectionism, the spillover impact on policies in other parts of the world would be adverse”.
He hoped that the fears about free trade will subside once the the US presidential election is over. “The tenor of the debate is more protectionist during elections and much less when you get back to business as usual,” he said.
Stating that the ease of doing business has improved massively in recent years, Jaitley said many sectors have now been brought under the automatic approval route.
“Over the last two-and-half years, most sectors have been reviewed and we now have probably the most open FDI policy in the world with 90 per cent of FDI coming in through the automatic route,” he said.
“We don’t have any instance of cases pending indefinitely before the Foreign Investment Promotion Board. We have learnt that notwithstanding the fact that there is a contraction as far as global growth is concerned, at least by domestic reforms we can neutralise the impact of the ongoing global slowdown,” he said.
Jaitley said many policy changes in the recent past have added to the ease of doing business. “Our ranking both in the ease of doing business and also in the global competitiveness index has moved up significantly in the last few years. And this has been aided by a large number of policy initiatives which have been taken by the government,” he said.
He said various policy measures and “every significant decision of the government are aimed in one direction — that is to promote economic activities and make India more investment friendly”.
The BRICS as a concept, he said, has taken concrete shape and the areas of cooperation among member nations are ever increasing.
“We now have a BRICS institution in the form of the New Development Bank and in a remarkably short period of time, it has initiated its own projects which it is financing. A contingency reserves arrangement is in place now and there is going to be increased cooperation in the area of customs and taxation,” he said.