New Delhi: Finance minister Arun Jaitley on Wednesday painted a picture of hope to domestic and foreign investors, assuring a transparent and rule-based policy environment, and promised to push for a number of economic policy changes to make regulations in India more business-friendly.

Provisions of the land acquisition law that have made it virtually impossible for companies to acquire land for industrial projects would be tweaked, he said, and the government would go ahead with a spate of reformist measures, including the sale of its stake in state-owned companies.

As if in response to criticism from analysts and businessmen over the past few months that the new government, elected on a development and business-friendly platform, had not unveiled any big-bang reforms, he emphasized his government’s commitment to the process of economic reforms rather than one or two “big bang ideas". “One has to consistently pursue the reforms agenda," Jaitley said, speaking at the India Economic Summit, organized jointly by the World Economic Forum and the Confederation of Indian Industry.

Jaitley assured that the government would strive to do away with crony capitalism, and auction other minerals, much the way it has said it will do with coal.

“When we take these steps to eliminate crony capitalism, there will be larger support for reforms. The investors will also be looking into a system which is fair and not where they have to depend on the largesse of politicians," he added.

Jaitley said the government would push ahead with divestment of its stake in state-owned firms but added that it will sell only minority stakes. He is open to completely privatizing loss-making firms, Jaitley added.

“Given the choice between continuing in their current state or being privatized, I think the second option seems to be the preferable."

India has 79 loss making public sector undertakings (PSUs), of which 49 are sick enterprises. The government has invested more than ₹ 1.57 trillion in the last few years, the finance minister had informed the Rajya Sabha in June.

India has set an ambitious divestment programme in this year’s national budget, which is mainly based on the government retaining majority stake in such companies.

Various ministers of the current government have said there will be a rethink on the land acquisition law passed by the previous United Progressive Alliance government that is widely seen as business-unfriendly. Jaitley said the government would address certain “illogical" provisions in the Land Acquisition Act, such as one that says land acquired by the government under this law cannot be used to set up private hospitals, hotels and schools, but added that there would be no change on the compensation policy.

Call to RBI

Speaking at another session of the conference, Mahindra and Mahindra Ltd chairman and managing director Anand Mahindra asked Reserve Bank of India governor Raghuram Rajan to be “a little more courageous" and cut interest rates to boost economic growth as even inflation has decelerated.

Economist and Harvard University professor Gita Gopinath said there was a case for lowering interest rates but said RBI’s reluctance to do so probably had more to do with prudence than courage.

Jaitley, in an interview with Mint published on Tuesday, has sought for moderation in interest rates. “That is one important factor. Inflation has been helped by both moderation of food prices in India and also the global oil prices. And I do hope the RBI bears this in mind," he had said.

RBI is set to review its monetary policy on 2 December and will be under tremendous pressure to bring down interest rates, with growth faltering and inflation falling consistently.

Retail inflation eased for the second month in a row to 6.46% in September, compared with a downward revised 7.73% a month ago, driven by lower price increases in food and fuel items. Factory output, measured by the Index of Industrial Production, rose 0.4% in August, unchanged from July and down from 3.94% in June.

On India blocking the trade facilitation agreement at the World Trade Organization, Jaitley said the government is not opposed to the pact. “It has become a victim due to unreasonable positioning by some developed countries," he said. All India is asking for is the peace clause on food subsidies to continue till a permanent settlement on the issue is found, the finance minister said.

He also seemed to realize the challenges involved in getting crucial labour reforms legislation through the upper house where the Bharatiya Janata Party-led National Democratic Alliance is in a minority, but said this was among the top priorities of the government and needed “further consideration".

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