Kaushik Basu clarifies on 'no-new reforms' comments

Chief economic advisor Kaushik Basu today clarified his comments, widely reported in the media as no major economic reforms would take place ttill 2014 (See: Major economic reforms to be on hold till 2014: Kaushik Basu)

Basu said that that during his lecture at the Carnegie Endowment in Washington on 18th April 2012 the gist of his argument was that 2014 was an important year because numerous European banks would have to begin to repay 1.3 trillion dollars worth of loans that they had received from the European Central Bank, which could precipitate a major global economic crisis - a third round of crisis after 2008 and 2011.

"I also asserted that despite India's current slowdown (growth in 2011-12 was 6.9 per cent), we will see Indian growth picking up slowly initially. But soon after the possible European crisis of 2014, we could see India as the world's fastest growing economy, faster than even China," Basu said.

He added, "I mentioned also, as I have done several times in India, that, thanks to coalitional democracy, there is some slowdown in economic reforms and decision-making."

He said he had specifically mentioned that the problem with the GST reform was that the opposition realised thet the GST was a good reform and was therefor reluctant to let it take place under the current UPA regime.

Basu added that he had said that a single-party majority government would not have faced this problem.