Australia's ability to trade with India will depend on economic
reform: Peter Varghese
The Indian Express, February 03, 2014
Former High Commissioner to India says reaching a high growth trajectory will depend on India getting its domestic policy settings right
Peter Varghese, Australia's secretary,
Department of Foreign Affairs and Trade, has said that
his country's ability to trade with and invest in India
will inevitably be driven in part by decisions New Delhi
makes on economic reform and financial opening.
"Businesses would know only too well that India's
economy has undergone a protracted slowdown since March
2011, marked by a slump in investment and industrial
output. GDP growth fell to 4.4 per cent in 2012-13. It
is forecast to remain somewhere in the 4.5 to 5.5 per
cent range over 2013-14 and many businesses are adopting
a 'wait and see' approach in the lead-up to national
elections due later this year,"said the former High
Commissioner to India at the CUTS International 30th
Anniversary Lecture on Monday.
On a positive note, he said Finance Minister Chidambaram
and RBI Governor Rajan "have taken positive steps to
address key concerns, including curbing the fiscal and
current account deficits and shoring up capital flows".
The short term outlook may be below par but India's
strong medium-term fundamentals give cause for more
optimism, he added.
He said signs that India's federal system is working to
show that good policy can also be good politics, "as
more dynamic states compete to create a more favourable
environment for private and foreign investment", were
also encouraging. "
Efforts by these states to cut through regulation and
bureaucracy, address infrastructure bottlenecks,
introduce tax incentives, and provide easy access to
land and power are leading to above-average growth in
some states."
Varghese, who spent three years in India during which
the relations between the two contries went to an
all-time high, said favourable demographics, prevailing
trends of urbanisation and industrialisation, and room
for productivity gains should enable India's economy to
achieve growth outcomes of 6-7 per cent over the next 20
years or more. "Reaching a high growth trajectory will
depend on India getting its domestic policy settings
right and investing in infrastructure, skills and
institutions."
He said Australia is well placed to partner with India
on both the infrastructure and skills agenda and to
share lessons learnt on policy reform. "Our key energy
exports also provide the necessary drivers for further
economic development in India, and we are committed to a
long-term, broad based energy supply relationship."
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