India Finance Minister Chidambaram promises more reforms By Andrew North

BBC News, Delhi Published duration 3 October 2012

media caption Indian Finance Minister P Chidambaram tells the BBC's Andrew North that the country is on the path of financial reform

India's finance minister has promised more reforms after it opened up its retail sector to foreign supermarket chains and cut diesel subsidies.

P Chidambaram also told the BBC that it was unfair to single India out for corruption, but said more was being done to tackle the problem.

Mr Chidambaram is one of the most important figures in the government.

The government is facing criticism of the reforms it announced last month to try to boost the slowing economy.

Opponents say the measures, which include opening up India's massive retail sector to competition from foreign supermarkets, will hurt the poor.

Last month, the government also announced a 14% rise in the price of diesel, which is heavily subsidised in India, and reduced the subsidy on cooking gas cylinders.

But some economists and large investors say the government is not going far enough, and warn that India still faces the threat of a credit rating downgrade.

In a BBC interview on Wednesday, Mr Chidambaram promised more reforms in banking, insurance and other sectors.

"It will be clear we are on the reform path," he said.

Sounding upbeat about India's prospects, the finance minister said the country would "return to 9% growth" once certain "fundamental constraints are addressed".

Latest forecasts from economists at the Asian Development Bank are less optimistic, however, suggesting that India's growth will slow to 5.6% this year, before picking up to 6.7% in 2013.

'Unfair'

image caption Opponents say opening the retail sector to global supermarket chains will hurt the small retailers

A series of corruption scandals have dented the government's image at home and abroad - with both Indian and foreign investors citing corruption as a major reason for their reluctance to invest.

Mr Chidambaram said it was unfair to single out India but said the government was "putting in place systems and procedures to deny people the opportunity to be corrupt".

"We are taking away the discretion of ministers," he said.

The finance minister denied receiving a bribe himself and said claims that most ministers took such inducements were "utter rubbish".

Most Indians, he said, would judge the government's record "when they go to vote".

It was a financial crisis in 1991 that opened the way for then finance minister Manmohan Singh to introduce the reforms widely credited with opening up India's economy.

With India's budget deficit rising, critics say it is the threat of another crisis that has encouraged the government to bring in the current changes.

Mr Chidambaram admitted that India was facing some problems, but said its "economic situation is better than many other countries".