COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Vajpayee unveils multi-point agenda for boosting economy

Promising an accelerated and firm pace of action to restore business confidence, Prime Minister Atal Bihari Vajpayee today announced a series of measures to revive capital markets, restructure divestment mechanism, permit minority foreign participation in insurance sector and float a Rs 280 billion road development project.

Addressing the inaugural function of the annual general meeting of the Federation of Indian Chambers of Commerce and Industry, Vajpayee said the government proposed to permit companies to buy back shares within the prudential guidelines of the Securities and Exchange Board of India. This has been a long-pending demand of the industry and the capital market.

The government would also abolish the existing provision requiring its prior approval for inter-corporate investments by one Indian company in another. The companies would also be permitted to enhance acquisition limits in accordance with the recommendations of the Justice Bhagwati Committee on takeover regulations.

The other steps to restore confidence in stock markets would include government's full support to the Unit Trust of India in honouring its obligations irrespective of the developments relating to the institution's US-64 scheme, setting up a transparent disinvestment mechanism within the next 30 days and undertaking structural improvements in demat trading and settlements.

The prime minister said the government was also examining the proposal to permit an appropriate level of minority foreign equity in the insurance sector.

In order to boost government spending in the infrastructure sector, the Vajpayee government would start, within this year, and from 20 different places across the country, work on a major 7,000-km-long, Rs 280 billion road project. It would envisage building a six-lane north-south corridor connecting Kashmir to Kanyakumari and an east-west corridor connecting Silchar to Saurashtra. The project has the potential to create 30 million man-years of employment, he added.

Vajpayee stated that a new telecom policy would be formulated within the next three months to provide state-of-the-art nationwide telecommunications network, speed up rural telephony and meet the new challenges of convergence of telecom, information technology, media and consumer electronics.

All outstanding issues between the Telecom Regulatory Authority of India and the department of telecommunications would be sorted out and the regulator's role strengthened within the next 15 days. ''A suitable out-of-court settlement will be found for the pending legal dispute. Hereafter, we will ensure that the two wings of the executive do not go to court, for this amounts to an abdication of political responsibility.''

The National Task Force on Information Technology has been mandated by the prime minister to resolve the outstanding issues in the telecom sector including the licence fee structure for basic and cellular telephone operators. The task force will submit its recommendations before November 30 and the government will take appropriate action before the end of the year.

Besides, the new Internet policy would be announced and licences issued to private Internet service providers over the fortnight. The DoT, he said, had yesterday granted the licence for Iridium's global satellite telephone project which will be launched on November 1.

The government would permit foreign equity participation up to 100 per cent for construction of international airports. Five cities have already been identified for the purpose.

In the oil exploration sector, the government would offer deep acreages with high potential for bidding and bids would be invited within the next two months.

Setting another time-table, Vajpayee said the environment ministry would prepare a list of all industrial and developmental projects above Rs 250 million in which environmental clearances were pending for over six months. These would be examined and ''all deserving projects'' would be cleared within the next three to six months.

Sounding a warning to unscrupulous industrialists, the prime minister said he had instructed the agencies concerned in the ministry of finance to take punitive action against predatory promoters who exploited the capital market in its boom phase and betrayed small investors.

Underscoring the need for good corporate governance, Vajpayee made it clear that the government-owned financial institutions, on the strength of their significant stakes in the companies, would demand better performance and adherence to sound corporate practices from the managements. ''The time has come when this matter cannot be left to the promoters alone.''

Besides, steps to improve the portfolio of financial institutions and deal with the problem of non-performing assets as well as improve the efficiency of financial institutions for making finance available at affordable costs is a high priority for the Bharatiya Janata Party-led government, he added.

The prime minister asked a galaxy of industrialists, who kept cheering him for the major policy announcements, not to take a short-term view and instead, tap the 'Big Indian Opportunity' waiting to be reaped. He said it is the short-term vision of investors which has stood in the way of inflows of foreign direct investment into the country.

As against the approvals of $ 52.67 billion, the total FDI inflow since 1990-91 has been only $ 13.41 billion, representing only 25 per cent of the total approvals.

Referring to the IT Action Plan prepared by the task force, the prime minister said most of its 108 recommendations have been accepted by the government and even implemented. Other recommendations for giving boost to hardware manufacturing in India were in the process of being finalised as specific action plans.

Vajpayee said India would respond to the reality of globalisation with a two-fold strategy -- strengthening the global economy and making the Indian economy viable. India would present its viewpoints at a major UN conference two years from now suggesting a new policy framework for the global financial systems.

The government is formulating a six-point conceptual framework for the innovative design of a new global financial architecture. These include managing large capital flows without excessive volatility, speedy decision-making and timely corrective action in the face of instantaneous electronic fund transfers across the globe, transparency among all public, government and quasi-government players in developed and developing countries, achievement of equity in an inherently unequal world economic order, timely preventive steps against the contagion effect and an ability to introduce innovation in a fast-changing financial system.

This would soon be presented for a national debate and views of the Opposition parties and all sections of business, industry and labour invited.

Vajpayee further said the Indian government is committed to the protection of intellectual property rights as these are critical for an emerging knowledge-based economy. ''My government's committment to the protection of IPR has been demonstrated by acceeding to the Paris Convention on protection of intellectual property rights on September 7.''

The government has also declared its resolve to meet the obligations on TRIPS under the World Trade Organisation.

Even though these were difficult times for the Indian and global business, Vajpayee said the BJP-led government's record in taking initiatives in the economic sphere was superior to that any government in recent memory, for a comparable initial period of six months in office. His government has not gone back on any of the reform initiatives of the earlier government and has rather added a new momentum to the reform process.

With the delicensing of sugar, petroleum and coal/lignite, virtually the entire industry segments, barring those in strategic areas, have been freed from the regime of industrial licensing.

UNI