India’s new government may take some time to unveil “grand, big picture reforms” as it is currently focusing on implementation of stalled projects worth USD 50-70 billion that will pay dividends in the short run by helping on the inflation and income fronts, RBI Governor Raghuram Rajan has said.
“In India, if you are looking for grand, big picture reforms it may take some time coming…But in terms of decentralising, in terms of doing the small stuff which adds up to the big stuff I think that is already happening,” Rajan said in a speech on India and the global economy at an event organised in Chicago on Friday by the Chicago Council on Global Affairs.
He said people have been expecting “major changes very quickly” from the new government and harboured the belief that it would be moving fast on a “number of dimensions that the people want them to move on.”
Rajan pointed out that the new Modi government has “stuck to the path the old government laid out” to show that there was continuity and this has benefited India in the eyes of the international investors.
“I think the government has essentially focused on implementation because that is really the need of the hour. Lot of projects are being stuck because of environmental permissions, forest clearances,” he said.
Rajan said it is important to get the stalled projects “back on the road” because there are USD 50-70 billion stuck in those projects, which once start functioning, would produce output that will help on the inflation and income front.
“Let’s get the projects back on track. The government is focused on that, it is not headline news…But it is something that will pay dividends in the short run and I think that is what they are doing,” he said adding that when the number of stalled projects start to come down sharply, “you will see something good is happening.”
In the longer run, once the economy comes on back on track there are “some major reforms” that probably need to be done. He, however, noted that in the short run, a number of states in India are moving ahead with labour and land acquisition reforms.
“We are still focused on macro stabilisation. Current Account Deficit, fiscal deficit, inflation all those numbers hopefully will be better going forward and if the world started growing faster it will help countries like us tremendously,” he said.
