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Kaushik Basu clarifies on economic reforms statement | Following the controversy around the statement made at the Carnegie Endowment for International Peace on economic reforms in the country, Chief Economic Advisor, Ministry of Finance, Dr. Kaushik Basu on Friday clarified that the central message
of his talk was the possible European crisis in 2014 and not India’s 2014 general elections. In
a statement issued by the Ministry of Finance, Basu
said: “Some of this has been reported poorly, juxtaposing my comments on Europe
in 2014 with the Indian election of 2014. This is unfortunate because the central
message of my talk was the possible European crisis of 2014 and India’s major
rise thereafter, likely overtaking China.” Clarifying further Basu said the gist
of his argument was that 2014 was an important year as numerous European banks
would begin to repay 1.3 trillion dollars worth of loans, which they had received
from the European Central Bank. “The gist of my argument was that 2014 was an
important year because numerous European banks would have to begin to repay 1.3
trillion dollars worth of loans that they had received from the European Central
Bank. This could precipitate a major global economic crisis—a third round of crisis
after 2008 and 2011,” said Basu. Basu added that due to coalition democracy there
was some slowdown in economic reforms and decision-making adding that a single
party majority government would not have faced this problem. “I mentioned also
that thanks to coalitional democracy, there is some slowdown in economic reforms
and decision-making. I specifically mentioned that the problem with the GST reform
was that the opposition realized this is a good reform. Therefore, it was reluctant
to let it happen under the current regime. A single-party majority government
would not face this problem. If there is a single-party majority in the next election,
that will facilitate such reforms,” he added. Basu was caught in the eye of a
political storm after he stated at an event in Washington that reforms in India
were unlikely before 2014 elections. The statement had received severe flak from
opposition parties accusing the UPA II government of suffering through ‘policy
paralysis’. |
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