M A I N   N E W S

PM promises decisive changes in economy
Bhagyashree Pande
Tribune News Service

The Road AHEAD

“India needs to develop long-term debt markets, deepen corporate bond markets, strengthen the insurance and pensions sectors and improve futures markets for better regulation” HOW: Plans to introduce bills proposing raising of foreign stake limits in insurance sector to 49 pc from the present 26 pc; opening up pension sector to private and foreign firms GDP: Expected over 7 pc in 2010-11 EXIT POLICY: To wind down economic stimulus measures in 2010-11

New Delhi, November 8
India’s long-stalled reforms in its financial sector got a fillip when Prime Minister Manmohan Singh said he would push through legislative changes, including those in the insurance sector which foreign players are eyeing.

Addressing global CEOs and captains of industry, the Prime Minister gave them a morale booster and promised a “decisive change” in the pace of economic progress.

“We are also better placed than at any time in the recent past to push the reform process forward”, he told the World Economic Forum in Delhi, while hinting at the strong democratic backing that the UPA II government has got in the elections in May.

Some of the reforms needed, especially in insurance, involve legislative changes and though initiatives in this area have been taken, the government will strive to build a political consensus needed for these legislative actions to be completed, Singh said.

India needed to develop long-term debt markets, deepen corporate bond markets, strengthen the insurance and pensions sectors and improve futures markets for better price regulation, said the Prime Minister as he outlined the economic reforms he wishes to initiate.

All these issues will be addressed through a gradual but steady progress in financial sector reforms to make the sector more competitive, while ensuring an efficient regulatory system, Singh said. He also said the government would accelerate the sale of stakes in state-run companies. “In the coming months and years, I hope to see a decisive change in the pace of our progress to becoming a leading economy in the world”, he said

By December, the government plans to introduce bills in Parliament proposing the raising of foreign stake limits in insurance to 49 per cent from the present 26 per cent and opening up the pension sector to private and foreign firms. It will also propose a law to cut its holding in top lender State Bank of India to 51 per cent.

The Prime Minister said growth in the next fiscal year, assuming a normal monsoon season, was expected to be more than 7.0 per cent compared with a 6.5 per cent forecast for the 2009-10 fiscal year. Singh also said his government would take steps in the 2010-11 fiscal year to wind down economic stimulus measures. We will take appropriate action next year to wind this down, he said, without giving any details on how the government planned to exit its fiscal stimulus.

However, the withdrawal of stimulus package has not gone too well with PM’s Cabinet colleagues. Planning Commission Deputy Chairman Montek Singh Ahluwalia said it would depend on the level of inflation and growth.

Winding down stimulus next fiscal means reducing fiscal deficit, you have to see how the fiscal deficit is reduced, Ahluwalia said. Commerce and Industries Minister Anand Sharma was more forthcoming in opposing the withdrawal.

“Let’s not forget that the recovery in the global context is stimulus dependent. It is premature to think of withdrawing or going in for exit strategy”, Sharma said. Last week Finance Minister Pranab Mukherjee, too, had stated ,for the present ... the fiscal stimulus will have to continue, to allow its impact to fully through the economy.

Since most of the growth will come from domestic demand the government has an ambitious investment programme in key infrastructure sectors like power, roads, ports, airports, telecom, irrigation and urban amenities, the Prime Minister said, adding that investment would come for these areas both from public and private sectors.

The government has estimated over $500-billion investment for the development of infrastructure, of which $ 80 billion is required for roads and another $60 billion in the power sector in the next three to four years.

Copenhagen Meet
PM vows fruitful outcome
Tribune News Service

New Delhi, November 8
Despite the fact that developed countries are primarily responsible for environmental pollution through industralisation, India today promised to work for a purposeful outcome on climate change at the Copenhagen Conference (to be held from December 6-18).

“We will work with all like minded countries to promote a purposeful outcome of the Copenhagen Conference,” Prime Minister Manmohan Singh said at the India Economic Summit attended by industry and business captains from around the world. “This was not a resultant of anything that we have done. Rather it’s in recognition of common but different capabilities. It is our hope that while all countries will be required to contribute according to their capacities and abilities, the world’s major economies will be prepared to (ensure that) large capital flows become available for adaptation measures,” Singh said.

Singh said India has put in place a system to deal with the issues of climate change. “We have prepared a National Action Plan on climate change outlining our response in this critical area focusing on increased energy efficiency and greater use of clean energy,” he said at the summit organised by the WEF and CII.

The PM also sought rich nations’ help for a technology regime under which the developing countries of the world would have access to these technologies at affordable rates. A round of negotiations in Barcelona ahead of the Copenhagen Conference ended with little progress in respect of commitments by developed countries on emission reduction and funding the efforts in this direction by developing nations.

He said environmental sustainability is an important objective and one that has gained significance in the context of climate change. Responding to a question, Singh said the climate change was a reality and India was more affected by it than some of the other countries.