Finance Minister Arun Jaitley today blamed the successive governments' inability to bring in reforms in the infrastructure and power sectors for the rising non-performing assets in the core segments. He said there are a number of sectors that have been impacted by the global slowdown, but some of these were hit more because of the absence of reforms.
Jaitley told the BRICS Economic Forum at Goa,
There are at least two sectors - infrastructure and power- where we can't blame external factors. Our own inability to bring in reforms adequately in these sectors, I think, caused the difficulty (in banks books).
Elaborating further, the Union Minister said that in the infrastructure sector the key problem is the inability to adequately and quickly settle the disputes.
We allowed them to pester for an indefinitely long period and now we have taken a number of steps, including amending laws, setting up faster courts, among others. I do hope we are able to get out of it, the minister said.
While accepting that absence of reforms in state discom led to a stress in the power sector, Jaitley said,
I think the only silver lining is that the causes of the stress (in power sector) have been analysed quickly and correctly, and now we are addressing those problems
He said bringing reforms in the country has become easier now than it was some years back.
I think there is a lot of maturity, which has come into the country's political system and this is noticed from the fact that reforming in India today is no longer as challenging as it used to be, say 10 or 20 years ago, he said.
It can be noted that most of the over Rs 8.5 trillion of dud loans of banks, a large chunk are their exposure to infra and power sectors. He noted that even at the state level, there is an interest to bring in reforms to attract investment and to improve economic activities. Jaitley, however, said some of the challenges the country is facing today are due to high population and resource mobilisation.
On the protectionist policies of the developed world, he said if this debate gets replicated in the developing economies or in the emerging markets, it probably would have extremely serious consequences. He said when the domestic economy was opened up, there were concerns that the country might be hit by protectionist policies of the developed nations, but those fears do not exist now.
As of now our economy has matured and we have got out of that (protectionist) debate. I can safely assume that today, in an economy like India, not even ripples of that debate are being felt, which you are otherwise witnessing in the developed countries itself, he said.
On the proposed BRICS rating agency, Jaitley said the objective of setting up such an agency is to have a professional and independent entity and not to have it be controlled by a group of countries.