Jaitley frowns upon growing protectionism

Mumbai, Sept. 27: Finance Minister Arun Jaitley on Tuesday frowned upon the growing tendency of protectionism across the world, especially in the US, leading to increased uncertainties in the global economy.

“There is a growing evidence of protectionism in the advanced economies that have professed openness a few decades back,” Mr Jaitley said while delivering the valedictory address at the ‘Seminar on Challenges in Developing the Bond Market in BRICS’ organised jointly by the finance ministry and industry body CII.

Addressing the SBI economic conclave later in the evening, the minister went on to name the US as the leading economy that is going back on an open trade policy.

“The tenor of debate in many countries, the US in particular, is becoming extremely protectionist. We can pass it off as what’s normally said in an election campaign is not exactly what is implemented. What’s implemented becomes far more moderate. But then the campaigns do push a part of the agenda itself,” the minister said.

Explaining his apprehension further he said “when the whole emphasis on protectionism comes from the most developed economies, then that doesn’t indicate a very positive signal for the future of the global economy itself. Brexit created some challenges, I hope the world overcomes it.”

In the light of these uncertainties many economies are taking unconventional measures such as low interest rates and negative interest rates, while India is pursuing a growth agenda, the minister added.

Meanwhile, he said the government has accepted the H.R. Khan Committee recommendations on the corporate bond markets and is in the process of implementing it over the next six-to-eight months.

The Khan committee, set up by the Reserve Bank, has called for simplifying entry to and exit from the bond market, apart from enabling access to capital internationally and make the domestic bond market more robust to fuel the overall growth.

Calling for developing a robust corporate bond market Mr Jaitley said, this is need to meet the increasing fund requirements in the infrastructure space, particularly in the areas of railways, smart cities, housing, ports and airports.

Currently, these projects are funded by banks and public finances, with a small portion coming from bond markets. But we need to create long-term alternate funding sources, which can be met by deepening the bond market, he said. “After two-and-a-half decades of economic reforms, still there is a lot of deficit in funds required for undertaking various projects and to bridge the gap we have to tap new sources of investment,” Jaitley added.

Even experience in BRICS countries with bond market has also reflected that the deeper bond market has the potential to expand scope of raising more capital, he said.