Defeat in Delhi polls will not slow down economic reforms: Finance Minister Arun Jaitley

NEW DELHI: Finance Minister Arun Jaitley said the government will vigorously pursue economic policy changes, undeterred by the heavy defeat suffered by the ruling Bharatiya Janata Party in the Delhi assembly election and allaying concerns that the upcoming Budget may be populist in nature.

“The fact that four (state assembly) elections have been won and one has not been won is absolutely no ground for believing that there will be any slowdown on the path which we have undertaken,” he said in response to a query at a joint press conference with US Treasury Secretary Jacob Lew at the end of the fifth Indo-US Economic and Financial Partnership meeting on Thursday.

Jaitley is seen unveiling a raft of reforms in the February 28 Budget as the Narendra Modi government looks to revive the economy, generate jobs and encourage investment. It’s also widely expected to set the economic agenda for the Modi administration, including a subsidy rationalisation plan to put government finances in order and maintain strict fiscal discipline.

BJP won only three out of 70 seats in the Delhi assembly election that was swept by Arvind Kejriwal’s Aam Aadmi Party. This is the first defeat for BJP after a string of successes in state elections following its crushing victory in last year’s general election.

Economists Laud Jaitley’s Pledge

BJP wrested Haryana, Maharashtra and Jharkhand, and is set to form a government in Jammu & Kashmir along with Peoples Democratic Party. The BSE Sensex extended gains soon after the finance minister’s assertion, ending almost 1% higher at 28,805 points.

There has been talk that some of the more radical reforms in the Budget could be deferred. Addressing these concerns, Jaitley said the kind of reforms the government has been undertaking will lead to increased investment and greater employment besides alleviating poverty and improving the quality of life. He said economic growth is poised to accelerate.

“India has had its challenges in the past few years from which we have…emerged and now are now in a position to take off at a much faster pace. This is against the backdrop of several other parts of the world facing various challenges,” the finance minister said. The revamped national account numbers show India’s economy is poised to grow 7.4% in the current fiscal, though experts have suggested this doesn’t seem to be consistent with evidence on the ground. Economists lauded Jaitley’s pledge to stick with the reforms agenda.

“This is good for the economy,” said DK Pant, chief economist, India Ratings. “We expect the government to continue with reforms that will get back high growth…We should also see improvement in the quality of the deficit.” Ordinances have been issued to raise the foreign direct investment limit in insurance and ease some of the harsher aspects of the land acquisition law to lift business sentiment.

The government has decontrolled diesel prices, and the cooking gas subsidy is gradually being moved to a direct transfer system through bank accounts to help plug leakages.