British Finance Minister Philip Hammond reposes faith in Indian reforms, says note ban, GST will drive growth

Reposing faith in Indian economy, British Finance Minister Philip Hammond today said that the twin exercises of demonetisation and GST implementation after temporary negative impact on the GDP would be strong supporters or drivers of higher growth .

Hammond, after a meeting with his Indian counterpart Arun Jaitley on the sidelines of the ongoing World Bank and IMF annual meetings, said that the India story remains engaging for UK as the country leaves the European Union for bigger trade relations.

Backing the reform measures initiated by PM Modi, he said, "The reform measures including demonetisation and GST -- both are welcome moves and their impact will start showing. We fully back these measures initiated by PM Modi and his Finance Minister Arun Jaitley."

But, Hammond sounded a note of caution by saying that, "Reforms in India have started to make a difference, but a lot more needs to be done. For example GST a single market system is a positive step. But perceptions take time to change. It's not enough to fix a problem, but also show that it's fixed."

He was replying to a query regarding the global perception that red tape and corruption are a stumbling block for big ticket foreign investors. He, however, added that the current government in India has taken considerable steps on improving the ease of doing business.

Yesterday, Finance Minister Arun Jaitley, addressing a group of investors, had said,"We can't expect investment and have too many conditions lined up at the same time. India consistently is figuring among improved nations with ease of doing business."

When asked about social conflicts which have witnessed an increase after the Modi govt came to power, including cow vigilantism and the sense of unrest among minorities, Hammond said, "There is social unrest in lot of places. In any economy, many things happen beyond economic activity. International investor prefers stability. But, India has shown tremendous resilience. There is unrest everywhere including terror and the business community has to deal with those situations. They key is that political class remains committed to reforms."

He refused to take questions on dialogue between Indian and UK govts over the return of liquor baron Vinay Mallya, who has taken refuge in the UK, after a consortium of banks approached the Supreme Court to get their money back from Mallya.

On relations with India, Hammond, whose country faces a tough economic battle post Brexit, said, "The India story remains engaging for UK. UK remains committed to partnership with India as we leave the European Union for bigger trader relations."