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'Pending Bills blocking reforms'

BS Economy Bureau

The clogging of economic Bills in Parliament was hindering reforms and foreign investment inflows into India, said Planning Commission member N K Singh on Wednesday.

"The economy is likely to grow 5.5-6 per cent this fiscal. An 8 per cent growth seems realisable in the Tenth Plan period," Singh said at a Federation of Indian Chambers of Commerce and Industry seminar on taxation.

The Plan panel had underlined deregulation and other reform measures, which would ensure the desired higher level of growth, he said.

Singh, however, warned the government against the slow pace of reforms, mainly on account of the delay in the passage of important economic Bills, including the Fiscal Responsibility Bill, the Convergence bill and the Banking Companies Bill to dilute government stake in state-owned banks to 33 per cent, along with that for the deregulation of the port and power sectors.

"Reforms seem to have run out of steam. There is a huge clogging of legislative agenda. Important Bills have been introduced in Parliament but are languishing for 12-18 months," Singh said.

Moreover, he said the government was yet to take a decision on amending labour laws, even though the second report of the Labour Commission had come up with forward looking recommendations.

"There is by and large a symmetry between tax rates and foreign direct investment. But India seems to be reasonably well placed, with a corporate tax rate at about 30 per cent. I don't think tax rates are the real issue (coming in the way of foreign investment)," Singh said.

He ruled out preferential tax treatments to lure higher foreign direct investment inflows, provided the government ensured a level playing field for all investors.

The high cost of funds, another deterring factor to investments, was on account of the high fiscal deficit, Singh pointed out.

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