‘Our ties may be second only to the relationship with the US’

Yuval Steinitz is Israel's finance minister, recently attending the Delhi Economic Conclave organised by the ministry of finance and the CII. Speaking with Srijana Mitra Das, the philosopher-turned-politician discussed Israel's interest in India, ways to tackle economic crisis - and tense dynamics with Palestine:

Please tell us about your visit.

I'm here to promote economic relations between our democracies. Our relations with India may be second only to the very special relationship we have with the US. Israel feels a close tie with India. It's important to invest in a strategic and economic relationship. We have very advanced technology, we're ready to share this with India, not just export but produce it together...we've agreed on encouraging joint research and development... and I announced a scholarship for Indian students to do post-doctoral studies in Israel. Israel-India relations hold great potential.

Speaking of potential, Israel began 2009 with a negative GDP growth rate, ending at 4.1% - how was this accomplished?

It was a serious situation. We decided not to throw too much government money into dramatic, anti-cyclical Keynesian policies. That would be like sacrificing the future to save the present - but killing both. Many western countries do this but we avoided it. Instead, we adopted special measures. I shifted the country to a biannual budget, one created every 24 months, done the first time in the world.

The business sector got the message - look, the government is not in panic. We're secure enough to plan for two years in advance, not one. We're not struggling quarter-to-quarter...a two-year budget is the right thing to do. It's totally unreasonable to run a country on an annual budget because it takes six months to prepare a budget.

You're then left with just six months for implementation...it's a logical necessity having six months to discuss a budget, debate in Parliament, present ideas in public, then have 18 months for implementation. The IMF said moving to a biannual budget helped Israel handle the crisis. In my understanding, sooner or later, most countries will shift to biannual budgets....

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