M A I N   N E W S

No need to panic, says Sinha
Tribune News Service

New Delhi, July 3
The Union Finance Minister, Mr Yashwant Sinha today said that the announcement by the Unit Trust of India (UTI) to the freeze sale and purchase of US-64 units was distressing but assured investors that their interests would be protected.

Allaying fears of investors over the UTI’s decision, the Finance Minister said the entire issue would be scrutinised. He added that normally the government allowed financial institutions to function independently without interfering in their day-to-day functioning.

“We will go into all aspects regarding the issue of the freeze of the sale of US-64 for six months and the issue of the sale of strategic holdings by the UTI”, he added.

Assuring investors, particularly small investors, that their interests would be safeguarded, Mr Sinha said there was no reason to panic.

The minister’s assurance however, did little to assuage the feelings of the investors. Trading sentiments were hit in the bourses and those companies which had exposure in UTI were hammered. The PHD Chamber of Commerce and Industry said the decision of the UTI would send wrong signals to the capital market.

PHDCCI President, Mr Sushil Ansal said after the complete run-over of the primary market, and the fall in the return on the term deposits, investors, particularly the small investors and the senior citizens, had begun to channelise their funds in the mutual funds schemes to get adequate returns.

In such a situation blocking the sale and repurchase of the units in an open-ended scheme would only send negative signals. The investors’ investible funds would be diverted to the traditional avenues of investment offering safety.

FM meets RBI Governor
Tribune News Service

New Delhi, July 3
The Union Finance Minister, Mr Yashwant Sinha, tonight held a meeting with the Reserve Bank of India Governor, Dr Bimal Jalan, to discuss the measures to kick-start the economy and to repose investors’ confidence especially of small investors following UTI decision to suspend selling of its US-64 shares in the market.

Sources in the Finance Ministry told The Tribune that the two leaders in their meeting, which lasted for about two hours, discussed various measures to reverse the slowdown in the economy. Mr Sinha and Dr Jalan discussed measures to dovetail monetary policy with fiscal policies to kickstart the economy. The measures, sources said could include lower interest rate regime to get higher investments.

Emerging out of the late night meeting, Mr Sinha said the immediate proposition of the government was to ensure that budgetary capital expenditure was met to spur demand and growth.

The RBI Governor said he and the Finance Minister discussed various measures to bring about overall growth in the economy.

When asked when would large public investments be pushed into the economy to spur growth, Dr Jalan said: “We will cross the bridge when we reach it.”

Earlier during the day, the Finance Ministry set in motion the process of consultations for reversing the downtrend in the economy with Financial Advisors (FAs) of various ministries being called upon to restrict and control revenue expenditure.