Dangerous to postpone important legislation for post-election: Rajan

A stable government after 2014 elections can’t be taken for granted,says RBI Governor.

Written by ENS Economic Bureau | New Delhi | Published: December 12, 2013 2:33:12 am

Even as the Lok Sabha was adjourned for the third consecutive day of the current session on Wednesday,Reserve Bank of India Governor Raghuram Rajan called upon political parties to push through pending economic legislation and take crucial decisions instead of postponing them post-General Election,when it could become even more challenging.

“A stable government post-elections can’t be taken for granted. It would be dangerous for parties to postpone necessary legislations with the idea of passing the legislation post-election. Post-election politics may become even more challenging for whoever assumes power,” he said on Wednesday at the Delhi Economics Conclave -2013.

The government must also push through large pending infrastructure projects and take political calls on decisions such as bringing diesel prices to market rates as any additional fiscal slippage would only amplify challenges that the new government will face,he said. His comments come a day after the Centre hiked prices of subsidised cooking gas by Rs 3.46 per cylinder. But its impact would be limited as under-recoveries on sale of diesel,cooking gas and kerosene are estimated to touch Rs 1.47 lakh crore this fiscal,according to India Ratings.

“It will benefit the economy if Parliament passes key bills and if current authorities take action to improve growth and fiscal health,including raising diesel prices to market level and eliminating other poorly targeted subsidies,” said the RBI Governor.

Warning that neither global rating agencies nor markets would “cut flak” if a stable government does not emerge post-election,Rajan said that political parties must reach a consensus and work together to address the challenges before the economy.

The Insurance Laws (Amendment) Bill that seeks to hike foreign direct investment cap in the sector to 49 per cent is one of the key pending legislations before Parliament though finance minister P Chidambaram has been keen to see it through in the Winter Session,which is the last functioning session before the General Election.

India’s rating may be pressured if polls end in hung Parliament: S&P

MUMBAI: India’s sovereign rating may come under pressure if General Election,due by May next year,end up with a hung Parliament,Standard & Poor’s said on Wednesday.

S&P has a “negative” outlook on India’s sovereign ratings,meaning any downgrade from its current “BBB-minus” would place the country’s debt in so-called “junk.” Reuters

Centre pays for high inflation but inaction stems from states: FM

New Delhi: Days after the Congress party received a drubbing in four state elections,finance minister P Chidambaram said high inflation is often “the price” that the government of the day has to pay but blamed state governments for their inaction in controlling food prices.

“It is common knowledge that the government of the day will pay a price for high inflation,especially if inflation persists over a long period of time,” said Chidambaram at the Delhi Economics Conclave-2013.

The finance minister blamed state governments for not amending the Agricultural Produce Markets Act and the Essential Commodities Act that would help to deal strictly with hoarding and profiteering.

RBI Governor Raghuram Rajan also underlined the need to control inflation. “It (inflation) is proving very costly to our economy in terms of savings,investment. No single data or point will determine our next move,but our effort is firmly on controlling inflation,” he said. ens

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