Nearly a month ahead of the Lok Sabha elections, a senior finance ministry official has indicated the government will continue to implement economic reforms irrespective of who emerges as a winner on May 23.
The statement seeks to reassure investors about policy continuity in one of the world's largest growing economy.
The Indian economy's potential growth rate will rise 50 basis points in the range of 7.5% to 8%, Krishnamurthy Subramanian, chief economic advisor in the finance ministry said in an interview to Bloomberg.
Global slowdown and trade tensions pose challenges to economic growth seen at 7 percent in the year to March 31, Subramanian said.
"The goods-and-services tax has given us a template for reforms absent a crisis," Subramanian said on March 11, referring to the nationwide tax introduced by Prime Minister Narendra Modi in 2017. "Global money cannot find at this point a better country than India."
The Modi government has pushed through key economic reforms such as Goods and Services Tax (GST), a bankruptcy law and an inflation targeting framework for the RBI among others. Investors are worried over the prospects of Indian market, policy outlook and economic imbalances if the current government fails to return to power.
Foreign direct investment (FDI) into Asia's third-largest economy declined 7 percent in the nine months to December from a year earlier.
BJP losing elections in three key states of Madhya Pradesh, Chhattisgarh and Rajasthan has only added to uncertainty about a weaker government after the elections. Distress in agricultural sector and rising unemployment have become major political tools in the hands of opposition to challenge the Modi government in Lok Sabha elections.
India under Modi government has climbed 23 spots to 77 in the World Bank's ease of doing business rankings but the current government has failed to win support from opposition to overhaul laws governing land acquisition and labour.
"Land and labour will be important for any government," said Subramanian, an associate professor, who is currently on leave from a top Indian management school. "That will set the stage for even higher growth, " he told Bloomberg.
Edited by Aseem Thapliyal
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