Even as the Lok Sabha was adjourned for the third consecutive day of the current session on Wednesday, Reserve Bank of India Governor Raghuram Rajan called upon political parties to push through pending economic legislation and take crucial decisions instead of postponing them post-General Election, when it could become even more challenging.
“A stable government post-elections can’t be taken for granted. It would be dangerous for parties to postpone necessary legislations with the idea of passing the legislation post-election. Post-election politics may become even more challenging for whoever assumes power,” he said on Wednesday at the Delhi Economics Conclave -2013.
The government must also push through large pending infrastructure projects and take political calls on decisions such as bringing diesel prices to market rates as any additional fiscal slippage would only amplify challenges that the new government will face, he said. His comments come a day after the Centre hiked prices of subsidised cooking gas by Rs 3.46 per cylinder. But its impact would be limited as under-recoveries on sale of diesel, cooking gas and kerosene are estimated to touch Rs 1.47 lakh crore this fiscal, according to India Ratings.
“It will benefit the economy if Parliament passes key bills and if current authorities take action to improve growth and fiscal health, including raising diesel prices to market level and eliminating other poorly targeted subsidies,” said the RBI Governor.
Warning that neither global rating agencies nor markets would “cut flak” if a stable government does not emerge post-election, Rajan said that political parties must reach a consensus and work together to address the challenges before the economy.
The Insurance Laws (Amendment) Bill that seeks to hike foreign direct investment cap in the sector to 49 per cent is one of the key pending legislations before Parliament though finance minister P Chidambaram has been keen to see it through in the Winter Session, which is the last functioning session before the General Election.
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