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Updated: July 19, 2013 18:28 IST

More FDI reforms, bank licences on anvil: PM

Special Correspondent
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Prime Minister Manmohan Singh during the ASSOCHAM's 92nd annual session
Prime Minister Manmohan Singh during the ASSOCHAM's 92nd annual session "The Vision of a new vibrant India" in New Delhi on Friday.

Acknowledging that the slowdown in the economy during the last one year was a cause for concern, Prime Minister Manmohan Singh on Friday hinted at more reforms in foreign direct investment (FDI) in some more sectors, reversal of the recent tight monetary policy by RBI and a major boost to a number of infrastructure initiatives to give a big boost to growth.

Conceding that the economic growth during 2013-14 will be lower than the targeted growth of 6.5 per cent, he said a turnaround from the 5 per cent achieved in 2012-13 would be important. ``The most immediate cause of worry is the recent volatility in foreign exchange market. The Reserve Bank of India (RBI) has done its bit to mobilise market expectations. More recently, it took additional steps to raise short-term interest rates. These steps are not meant to signal an increase in the long term interest rates. They are designed to contain speculative pressure on currency. Once these short term pressures have been contained, as I expect RBI to even consider reversing these pressures,’’ Dr. Singh said while speaking at the annual general meeting of the Assocham here.

Dr. Singh said the government would use all policy instruments available -- fiscal, monetary and supply side interventions -- to ensure that the current account deficit (CAD) declines further over a period of time. ``More FDI reforms in some other sectors are also on the anvil. A new banking license policy has been announced and new licenses would be issued very soon,’’ he remarked. In big-ticket reforms push, the government on July 16 decided to hike FDI in the defence, telecom, insurance and some other sectors to boost inflow of foreign funds and investments.

The Prime Minister said the basic fundamentals of economy were sound and healthy and several measures had been taken by the government to correct imbalances on the macro front. Dr. Singh said many projects that have been held up for lack of regulatory approvals were being expedited and big-ticket projects are being identified to clear the hurdles in order to give a big push to infrastructure initiative aimed at reviving the growth momentum. ``Infrastructure was absolutely critical for medium term growth prospects and progress on them was being monitored on a quarterly basis,’’ he added.

Listing out a number of infrastructure initiatives, he said two major ports in Andhra Pradesh and West Bengal, new airports in Navi Mumbai, Juhu, Goa, Pune and Kannur have been cleared. Talking about GAAR, Dr. Singh said it has been postponed by two years and there is greater clarity on the rules. ``Gas pricing has been corrected to reflect market realities better and procedural improvements have been made in the road sector to improve the economic viability of projects. We will persevere with these initiatives and I hope that their impact will be felt in the second half of this year,’’ he added.

Putting thrust on pushing exports, he said this will be helped by the depreciation in the rupee will help. ``There is a time lag before this benefit will be felt in terms of export volumes, but orders being booked from now on would certainly benefit. The government is also trying to remove the constraints in the export of iron and other ores which saw a considerable decline during the last one year,’’ he remarked.

On the demand side, he said there was a need to reduce the demand for gold and petroleum products -- the two biggest drains on the foreign exchange front. ``The government has taken measures to control the demand for gold and they have had some effect. Gold imports declined sharply in June, and I hope they will stay at normal levels from now on,’’ he said.

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The current economic scenario in the country calls for a greater need to
work on the supply side in addition to boosting foreign inflows.

from:  Vaishnavi
Posted on: Jul 20, 2013 at 19:34 IST

Since last one and half year we all are hearing about reform and on the
name of reform we only provide more FDI quota and as we can see it is
result of well established reform of our honorable PM that rupees value
is depreciating and now when oil rate is going up from which US economy
showing good sign we could think its effect on our CAD data for which
government always blame to higher import of oil. All i have to say for
India globalization is only means to move our economy by foreign means.

from:  abhishek
Posted on: Jul 20, 2013 at 00:14 IST

Once again, while India is opening up another chapter in its ongoing economic reform strategies, India's Muslim will be nowhere to take advantage to open a bank of their own to cater to the special needs of the community. An overwhelming majority of 200 Muslims, are out of the ambit of India's banking system. Reasons: level of poverty, RBI and UPA government's communal prejudice against non-interest or Islamic Banking, lack of any large sized corporate entity to be able to come with the status of opening a new bank. All factors have combined to deprive Muslims a level playing field to participate in the benefits of India's economic reforms. India's politicians, who survive on Muslim vote bank, are the main culprits that have very successfully marginalized Muslims in India. No country can make a claim to be on the way to become an economic super-power with such a big chunk of its population dragging behind.

from:  Ghulam Muhammed
Posted on: Jul 19, 2013 at 19:17 IST

This will leave most of the people untouched and add little value.
What is needed is maximum inducement and incentives for infrastructure development which is abysmal-- roads, power, water and waste management.

After 60 years of 'planning' even the national capital is without reliable power or water supply while drowning in garbage. People like Manmohan Singh and his alter ego Montek Singh Ahluwalia are still locked into Soviet era thinking in which they made their careers. Don't expect these anachronisms to solve today's problems, let alone lead the country into the future.

from:  N.S. Rajaram
Posted on: Jul 19, 2013 at 17:47 IST

It will be better for the government to review the usage of petroleum products by government either directly or indirectly. This will help them easily to reduce at least 15% of the oil import. A great saving. Do not stop people buying gold. It us a big source of national wealth development

from:  Vaidyanathan
Posted on: Jul 19, 2013 at 17:08 IST

Although creating a business environment for FDI inflows is good for growth but the government seems to be hedging all our bets on it to reduce the CAD. We also need to be working on increasing investments from within the country by creating laws, resources and environment to boost entrepreneurship. This will improve our manufacturing and exports. This will take a little longer but is a more sustainable growth model.

from:  Rajat Sharma
Posted on: Jul 19, 2013 at 15:22 IST
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