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FM says stimulus to stay
Tribune News Service

New Delhi, November 3
Union Finance Minister Pranab Mukherjee today said the fiscal stimulus measures would continue till the economy recovers fully and that inflation was not an issue of immediate concern.

Addressing the Economic Editors' Conference here, the Finance Minister said efforts would be put in to roll back the fiscal deficit to 5.5 per cent in the next financial year from 6.8 per cent currently.

At its quarterly monetary policy review last week, the Reserve Bank of India held key policy rates steady but began withdrawing emergency liquidity support measures, which were put in place last year to protect the economy from the global downturn.

Earlier, the FM said the government was considering setting up of regulators for the coal and other infrastructure sectors. “Serious deliberations are underway for establishing a regulator for the coal sector and similar thought is now being given to other infrastructure sectors as well,” he said at a CII-organised 'South Asia Conclave on Enabling Regulation for Investment in Infrastructure'.

Mukherjee hinted at more such independent regulators in contrast to suggestions by industry body CII for a composite regulator for the entire infrastructure sector.

The infrastructure sectors such as electricity, transport, roads, railways, ports and airports, telecommunications are 'natural monopolies' and rules of perfect competition do not always apply, he said. “In India, we have a commendable record of setting up of independent regulatory authorities for the infrastructure sectors,” he said.

Mukherjee said the government would consider disinvesting its stakes in profitable listed public sector units when these come out with follow-on offers. The government would consider sale of a part of its shareholding by riding piggyback (on) the follow-on public offerings, said a note prepared by the Finance Ministry on the occasion of Economic Editors' Conference.

There was a mix of direct disinvestment as well as fresh equity in the case of NHPC and Oil India that were listed recently. The note said the government would focus first on these listed profitable public sector companies where less than 10 per cent stake was held by the public. It said the government can go in for either fresh equity or direct stake sale, or both, in the IPOs.

The note said the National Investment Fund, which gets proceeds of disinvestments, has earned less returns on investments than the minimum required in the first two years.

In the first quarter (Q1) of 2009-10, the economy has recorded a growth rate of 6.1 against 5.8 per cent in the preceding two quarters of 2008-09. The industrial growth as captured by the Index of Industrial Production (IIP) has improved considerably in the months of June and July 2009, with growth increasing to 8.2 per cent and 7.2 per cent, respectively, followed by 10.4 per cent in August 2009.

The fiscal deficit is expected to come down from 6.8 per cent of GDP in 2009-10 (BE) to 5.5 per cent in 2010-11 and further to 4.0 in 2011-12. Correspondingly, the revenue deficit is expected to decline from 4.8 per cent of GDP in 2009-10 to 1.5 per cent in 2011-12.

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