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Gujral exudes confidence on the future of reforms

Addressing the India Economic Summit organised in New Delhi by the World Economic Forum and the Confederation of Indian Industry, Gujral said the insurance bill, civil aviation policy, the new companies bill, and the foreign exchange management act were a few of the long-term measures which his government had hoped to put in place.

However, he insisted that there was little to worry about. "I am confident that the political consensus will steer the economy towards further reforms, irrespective of the composition of the government which comes to power,'' he declared.

Gujral assured those present, including many foreigners, that delays in foreign and domestic investments will not take place.

Gujral, whose government has submitted its resignation to the President, said, ''The main challenge lies in sustaining the continuity with change.''

He termed the Indian political system as a very stable one despite certain hiccups. Gujral also pointed out the need for reeducation of attitudes in the country's move towards a high growth trajectory. This could be achieved by changing the mindsets which sometimes reflected narrow vested interests.

To keep India unified while coping with the changes, the country already possessed the three main ingredients in abundance, he stated. These are strong democratic fundamentals, consensus regarding the new economic policies, and a successful marriage between change and continuity.

The prime minister, however, said the country has followed a cautious policy to avoid getting into situations like in Mexico or the crisis in Southeast Asia. "We want to go ahead but will watch our steps," he asserted.

Gujral said India has not been able to attract enough foreign investments as compared to China because the Indian reforms were only six years old. He, nevertheless, conceded that there was a lack of clarity and the procedures for investors were cumbersome, and that much improvement was needed on this front. For example, the proposals in the auto sector had been dealt with in a case-by-case basis.

Gujral pointed out that the infrastructure sector has to be strengthened to attract foreign investors, and many of the bottlenecks were cleared during his tenure. "Infrastructure has received a great impetus in the recent past and new policies have been initiated in practically every area. The infrastructure sector has opened up enormous opportunities as we need to add, over the next five years, approximately, 52,000 mw of power, 160 million tonnes of port capacity, 24 million telephone lines as well as upgrade the existing national highways connecting the four metros with four lane highways," he stated.

Gujral said he expected to see significant breakthroughs in the roads, ports, civil aviation, and oil and natural gas sectors. Along with facilitating participation by private industry, he asserted that the need was for putting in place effective mechanisms to regulate such participation and in a fair and objective way.

The prime minister pointed out that foreign direct investment inflows had risen substantially in recent years and the level of 2.6 billion dollars reached last year was surpassed by August this year. "Since 1991, FDI inflows have amounted to 10 billion dollars. While this was an encouraging development, but seen against the fact that the total approvals given during the same period were worth about 40 billion dollars, we are seriously concerned about the follow-up action on FDI approvals," he added.

He further cautioned: "All these figures are much less compared to the potential and significantly modest when seen against what some other Asian countries have been able to achieve."

Gujral said while the growth has averaged between six and seven per cent during the last few years, he was confident that it should be possible for the country to achieve a seven to eight per cent by the turn of the century.

Speaking about India's larger role in the Asian region, he said the South Asian preferential trading agreement was acquiring greater meaning and the SAARC countries were committed to the establishment of a South Asian free trade area by the year 2001. Beyond SAARC, India has close ties as a full dialogue partner with ASEAN.

He added that India was also member of the Indian Ocean Rim whose membership stretches from the coast of Africa across the Indian Ocean to Australia. The country has institutional linkages with subregional African groupings such as the Southern African Development Community.

Nearer home, along with some neighbouring countries, India has a subregional programme of economic cooperation called the BISTEC involving Bangladesh, India, Myanmar, Sri Lanka and Thailand. All these linkages and groupings would gain ground, and with the economic space becoming much larger, the opportunities would multiply accordingly, he said.

''That being the conducive setting, we are confident that within a period of five to six years from now, we would not only have taken off but the flight would have got on course. Let me invite you to join us on board,'' he stated.

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