It is a matter of great satisfaction and relief that the people of India have voted for a relatively stable government. In particular, the businessmen are delighted that economic reforms can go ahead. Even the BJP supporters are happy that the nation can move forward under a government that need not keep looking back for approval from the Leftists. Cutting across party lines, people believe that Manmohan Singh is the best person to lead India out of the economic slowdown and that the growth process can be more inclusive.
Exporters, importers and businesses at large would look forward to continuation of Kamal Nath as the Minister of Commerce and Industry. In his five years in the ministry, he worked tirelessly to gain wider acceptance for India’s views at the World Trade Organization (WTO). He made a number of friends in various countries and his network of contacts will be very useful in the negotiations at the WTO.
Pascal Lamy, the energetic Director General of WTO, will spare no effort to conclude the Doha Development Round by this year-end. Mere stalling the negotiations will not work and Kamal Nath will have to be around to secure India’s interests with his keen understanding of the finer points gained over the last five years.
In trying to attract Foreign Direct Investment (FDI), Kamal Nath did quite well, despite the opposition from the Left. The global financial crisis has impacted the inflow of investments. Kamal Nath will be needed to bring all his experience to fine-tune the policy and sell the India story to the world.
Exports are on the downslide, mainly due to recession in the developed world. There would be pressures on the new government for more export subsidies. Before the elections, Kamal Nath did well to resist demands for 5 per cent additional DEPB from the exporters. He will be better placed to dismiss such demands now but he must lose no time in looking into genuine complaints of exporters about un-rebated taxes that make Indian exporters uncompetitive.
Of late, a spate of anti-dumping and safeguard measures on primary products like cold-rolled steel and soda ash threaten to impact downstream user industries adversely. Even with such protectionist measures, the domestic producers sought to be protected may not survive if their customers get killed. Kamal Nath will be required to listen to the downstream user industries and strive to evolve a mechanism to strike a delicate balance between necessary protection against unfair trade practices and unfair protection that some producers of primary products seek.
Kamal Nath negotiated many trade agreements. Precise benefits from these agreements have not been studied in depth or articulated well enough. Nath will be required to go ahead with some agreements where framework agreements are already in place, but he should make sure that overall benefits for the economy are well studied and articulated. He must also assess the impact of the agreements at a time of global economic slowdown before going ahead.
The commerce minister should try to give the exporters a clean administration. He must ensure that the Directorate General of Foreign Trade and its Regional Offices are more efficient and less corrupt. He should review the policies and processes to help exports revive quickly even during a recession in the overseas markets.
Source : Business Standard