'New govt to inherit worse eco situations than 1991 & 1998'

Uncomfortably high current account deficit, weak economic growth, continuously falling currency, soaring inflation, subdued demand and high interest rates – these are the key issues India is currently grappling with and the threat of credit rating downgrade looms large. 

Puting the blame on delay in decision-making, former finance minister Yashwant Sinha says the new government that will come to power next year, will inherit an economic situation worse than 1991 and 1998. India's macros have been hard hit due to policy paralysis. Due to delayed decision making, projects worth Rs 15 lakh crore are held up, he added.

Also Read: India Sept wholesale, consumer inflation may stay elevated

Sinha, who is also the senior leader of the Bharatiya Janata Party (BJP), currently the largest Opposition party in India, said that his party welcomes foreign direct investment (FDI), but not at the cost of the country’s laws.

Clarifying on the contentious insurance sector he said, BJP had promoted FDI when it was last in power and is open for discussion with the government on hike in FDI in insurance. "It was the Standing Committee that opposed FDI cap hike in insurance, not BJP," he added.

Unavailability of coal has doomed India’s power sector, adding to macro woes. World’s largest coal producer, Coal India which also enjoys a monopoly in the Indian coal sector, missed production targets by six million tonne during the first half of 2012-13 courtesy national strike, law and order conditions and a work stoppage.

Accusing policies by Congress government, Sinha said they (policies) have ruined India’s coal sector and resulted in huge corruption. In a historic move, the government recently approved auction of coal blocks to private companies. All natural resources must be auctioned with exception to water, he recommended.

Since India is already in a election mode with upcoming state elections, so the government should not focus on taking any bold decisions now, he said.

In the monsoon session of Parliament (August 5 to September 7) key legislation relating to food security, land acquisition and removing manual scavenging were passed. However, there is no clarity yet if the Winter Session of Parliament will take place and even if it does, it might be shorter than usual term, he added.

Meanwhile, BJP is likely to release its manifesto for 2014 elections soon. If voted to power, its first priority would be to end policy paralysis, assured Sinha.