With both the rupee and the stock market on a slide, a worried Finance Ministry on Thursday announced a five-point action plan to boost confidence in the markets and revive sentiment in the economy.
But, unimpressed, both the stock market and the rupee continued to fall. Even as Finance Minister P. Chidambaram’s briefing was being broadcast live on television, the benchmark BSE Sensex, after opening lower, shed another 50-60 points, and the rupee slipped further by almost 5 paise to Rs 58.32 against the dollar. Although both recovered slightly mid-session, the Sensex ended at 18,827 points, down 214 points or 1.2 per cent over Wednesday’s closing. The rupee closed down 19 paise at 57.98.
Maintaining that the steps already taken during last nine months have yielded “significant” results, Chidambaram said there was no need to panic and that issues spooking the markets would soon get resolved.
Chidambaram’s to-do list includes resolving issues related to coal pricing/allocation for power plants, increasing or even axing limits on foreign direct investment (FDI) in many sectors, addressing gas pricing issues, pushing for acceptance of the K. M. Chandrashekhar Committee recommendations on categorisation of foreign investors and ‘know-your-customer’ (KYC) norms applicable for them, and kick-starting stalled infrastructure projects.
“I would think the issues will be resolved before the end of June,” Chidambaram asserted. “My preliminary view is that we are broadly in favour of the Chandrashekhar committee recommendations. So our representatives on the SEBI board will express this view in the meeting on June 25,” Chidambaram said. He also mentioned that the report was “extremely positive” and the recommendations “deserve to be accepted.”
FDI Cap
Chidambaram also hinted at a radical rethink of the FDI policy. A committee under the Chairmanship of Economic Affairs Secretary Arvind Mayaram is looking at revising upward the foreign investment limits for various sectors.
The Committee is expected to give its report early next week. Then, there will be a meeting between the Finance Minister and the Commerce Minister followed by a final meeting with the Prime Minister.
“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’s the mandate for the committee. We are looking at all sectors, including Defence,” the Minister said.
Pending projects
On the delayed and pending infrastructure projects, Chidambaram said the Government has created a special cell within the Cabinet Secretariat to fast-track all stalled projects. The aim is to identify projects that need “just a little push” in terms of one or two clearances. “Give the push so that 20-30 projects, what we call low-hanging fruits, among the 250 private sector projects, can quickly get off the ground.” This, he said, will be done this month itself.
On skill development, the Finance Minister said the Prime Minister has set up a Cabinet Committee and hoped that the initiatives announced in the Budget will be operational by, say, mid-August.