| Finance minister P. Chidambaram in New Delhi on Friday. Picture by Prem Singh
New Delhi, Oct. 21: P. Chidambaram, having picked up the choicest policy ingredients in China’s growth potion, wants to ensure some of these go into making the great Indian development brew his government has promised.
The chef in the finance minister tossed up one recipe he said must be adopted if the country is to achieve high growth and retain its competitive advantage abroad ' get more firms to the stock market, and into public gaze.
“Non-traded companies are not adequately assessed, rewarded or punished by the market,” said Chidambaram, adding that just as political parties are judged by the ballot, it is important an opportunity was given to the market to judge the performance of companies by making large portion of their equities tradable.
Drawing comparisons with China, the finance minister said India needs strong financial sector reforms and a change in the way state-owned firms are managed.
“We will press on with financial reforms. Unless this sector is sufficiently large, we cannot generate savings, capital flows and tax revenues. These arise from capital expenditure on production of goods and services leading to high growth,” said Chidambaram, while inaugurating the 85th annual general meeting of Assocham.
Shanghai and Beijing still fresh in his mind, the minister marvelled at the way China intends to raise $270 billion by making mostly state-held stocks publicly traded. This is the biggest shake-up of ownership since 1990.
“By making all China’s shares tradable, the Chinese government aims to plug a pension shortfall. We have pension shortfall too. This is aimed at increasing private ownership of companies, making management more accountable to shareholders,” he said, adding China’s goals are germane to Indian public and private sectors, too.
The remarks were an oblique reference to the Left parties, who have been opposing selloff in navratna PSUs. Chidambaram, however, listed the items on his reforms agenda for the next three to six months. One of those is the Pension Fund Regulatory and Development Authority bill, a legislation the standing committee has cleared for introduction in Parliament’s winter session but which has run into a wall of resistance from Communists.
The finance minister’s penchant for cricket analogies came into play, too. He said the government was committed to providing a “good wicket” for pushing up growth, but added that this was not enough to win matches. “There must be good batsmen, bowlers and fielders also.”
He said the savings rate in the country, already high, must go up further, given that Chinese put away much more.