Lack of reforms created huge NPAs in infra, power sectors: Jaitley

Though many sectors were hit by the global slowdown, some of them bore the brunt due to the absence of reforms. “There are at least two sectors - infrastructure and power- where we can’t blame external factors. Our own inability to bring in reforms adequately in these sectors, I think, caused the difficulty (in banks books),” Jaitley told the BRICS Economic Forum here. The inability to “adequately” and “quickly settle” the disputes were among the key challenges faced by the infra

structure sector. “We allowed them to fester for an indefinitely long period and now we have taken number of steps, including amending laws, setting up faster courts, among others. I do hope we are able to get out of it,” the minister said. 

Accepting the absence of reforms in state discom, Jaitley said, “I think the only silver lining is that the causes of the stress (in power sector) have been analysed quickly and correctly, and now we are addressing those problems.” Bringing in reforms in the country had become easier now than some years ago. “I think there is a lot of maturity, which has come into the country’s political system. This is noticed from the fact that reforming in India today is no longer as challenging as it used to be say 10 or 20 years ago,” he said, pointing to the major portion of the Rs 8.5 trillion-plus bad loans of banks was due to the exposure to infra and power sectors. Even at the state level, there is an interest to bring in reforms to attract investment and to improve economic activities, Jaitley said, while noting that some challenges were due to high population and resource mobilisation. 

Dwelling on the protectionist policies of the developed world, he said if this debate got replicated in the developing economies or in the emerging markets, it probably would have extremely serious consequences. When the domestic economy was opened, there were concerns that the country might be hit by protectionist policies of the developed nations, but those fears cease to exist. “As of now our economy has matured and we have got out of that (protectionist) debate. I can safely assume that today, in an economy like India, not even ripples of that debate are being felt, which you are otherwise witnessing in the developed countries itself,” the finance minister said. On the proposed BRICS Rating agency, Jaitley said the objective is to create a professional and independent entity and not have a group of countries to control it.