PM to reiterate reform agenda at G20 summit

After castling the mercurial West Bengal Chief Minister Mamata Banerjee, who singlehandedly blocked the UPA government’s reform proposals, Prime Minister Manmohan Singh is likely to make the most of the G20 summit at Los Cabos in Mexico to reaffirm his government’s commitment to continue with economic reforms in the next two years.

With the Indian economy on a downward spiral, Singh was criticised by the industry and global agencies for his failure to kickstart the second wave of economic reforms.

Ally Trinamool Congress, led by Banerjee, was the biggest of all stumbling blocks. The party opposed foreign direct investment in multi-brand retail tooth and nail. It also raised a red-flag on the government’s pension reform proposals.

As Banerjee lost her foothold in the UPA coalition by opposing the Congress’s presidential nominee, Pranab Mukherjee, Singh may consider this an opportune moment to implement the long-pending reforms. The ground rules are likely to be spelt out at Los Cabos, where the PM arrived on Sunday.

The government is under pressure to rein in subsidies and other spending, after the budget deficit widened to 5.75 per cent of the GDP in the fiscal year that ended on March 31. Recently, the Union Cabinet failed to decide on reduction in urea subsidy due to internal opposition. Both Direct Tax Code bill and Goods and Services Tax bill are pending.

Earlier in the week, international credit rating agency Standard and Poor's warned that India may become the first emerging economy among BRICS nations to lose its investment-grade rating unless it revives growth rate and spurs reforms.

Singh and Mukherjee have blamed the eurozone crisis for the plight of Indian economy. In his departing statement, Singh said problems in Europe would further dampen global market and adversely impact India’s economic growth.

A day before leaving for the G20 summit, US President Barak Obama called Singh, seeking his advice on how to buffer global economy against the European debt crisis. Though the economist PM’s advice to Obama remains under the wraps, in a readout of their telephonic conversation, White House said the leaders discussed “the importance of steps to strengthen the resilience of the global economy” with a focus on steps to lift growth.