India's economy to get a boost from investment

New Indian Prime Minister Narendra Modi's government has listed putting the economy back on track by encouraging foreign investment and speeding up approvals for major business projects as one of its top priorities, as it unveiled its agenda for governance for the next five years.

It also named China, Japan, Russia and the United States as its key international partners in its bid to restore India's global standing and said its diplomacy would be based on a doctrine of mutually beneficial relationships.

The statement of intent of the two-week-old Bharatiya Janata Party (BJP) government was delivered yesterday by President Pranab Mukherjee in his ceremonial address to a joint sitting of both houses of parliament.

Indian stocks climbed to all-time highs yesterday, amid speculation the government will boost spending and accelerate approvals for roads, ports and power projects.

By tradition, the President's speech to Parliament represents the views of the government and analysts said Mr Mukherjee's address not only reaffirmed the promises made by the BJP ahead of the general election but also bore a strong imprint of Mr Modi.

"We will work together to usher our economy into a high- growth path, rein in inflation, reignite the investment cycle, accelerate job creation and restore the confidence of the domestic as well as international community," Mr Mukherjee said in his 55-minute speech.

This, he said, would be done by creating a predictable, transparent and fair policy environment; reforming and simplifying tax laws; enhancing the ease of doing business; and encouraging foreign investment.

Labour-intensive manufacturing would be promoted to create jobs, said Mr Mukherjee, who was himself a finance minister in the previous government of Prime Minister Manmohan Singh - and has been blamed by some for policies that hurt the economy.

Mr Mukherjee also said the government would chalk out an ambitious infrastructure development programme to be implemented in the next 10 years.

The focus, he added, would be on railways, high-speed trains, freight corridors, farm rail networks, low-cost airports, energy and technology.

"International civil nuclear agreements will be operationalised and nuclear power projects for civilian purposes will be developed," he said.

Containing food inflation would be another priority.

"There would be an emphasis on improving the supply side of various agro and agro-based products... my government is alert about the possibility of a subnormal monsoon this year and contingency plans are being prepared."

India has been struggling under the onslaught of slow growth and stubborn inflation, with annual gross domestic product growth falling below 5 per cent in the last two financial years, while consumer price inflation averaged around 10 per cent last year.

Mr R. Jagannathan, editor- in-chief of news portal Firstpost, said more details were needed on the economic agenda outlined.

"Industry will wait to hear about what the government proposes to do about land acquisition: the speech promised a national land use policy, where non-cultivable land is put to strategic use. Whether this will mean more land being made available for infrastructure and manufacturing remains to be seen," he wrote.

"But nothing was said that industry did not want to hear."

yprajesh@sph.com.sg

This article was first published on June 10, 2014.
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