In the next fortnight, the government will take a slew of measures to revive India’s sagging economy that will include review of the foreign direct investment limits, coal pricing, its allocation to power plants and gas pricing, Finance Minister P Chidambaram said on Thursday.
“Coal, gas pricing issues, FDI limits will be resolved by June-end,” Chidambaram said, seeking to assure jittery investors and panic-stricken market and also promised more reforms by the middle of August.
He said that reviving the economy and rejuvenating investment sentiment might be slow, but it needs to be looked at from the long-term perspective.
The finance minister’s comments come after the rupee slumped to a record low of 58.98 against dollar this week which did not bode well for sustained economic growth.
“It is not an ODI match where a wicket or a six is expected in every ball in an ODI, economic reforms don’t work that way, we have to take long-term view of what is happening in India, I think significant results have been achieved in last nine months and I am looking forward to more reforms,” Chidambaram said.
On FDI liberalisation, things were in the last lap, he said.
"We are looking at every sector. The principle is very simple. Does the FDI cap serve any purpose today? If it does, we will keep that cap. If not, the cap should be either relaxed or removed. That is the mandate of the committee and it is in the final stages. We are looking at all sectors including defence.”
He also ruled out any expenditure compression in the current fiscal as investments were needed to spur growth. Political analysts were quick to react to this, saying next year being the election year, the government cannot afford to squeeze spending.
In this context, the minister has also called meeting of PSU bank chiefs and would persuade them to pass on the benefit of RBI rate cut to borrowers since although the RBI has reduced policy rates by 1.30 per cent since January 2012, banks have lowered lending rates by only 0.30 per cent.
On disinvestment of Coal India, he said the coal major was on the list of PSUs which have to be divested and the finance ministry would try to impress upon the trade unions that funds raised would be used for capital expenditure of other state-owned companies.
"I have to put in Rs 15,000-20,000 crore annually for five years into PSU banks," he said.
