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Next round of reforms will cover factor markets, says Kelkar

Union Finance Secretary Vijay Kelkar today said the next round of economic reforms would lay emphasis on factor markets and cover the money market, land reforms, labour market and measures to strengthening the financial institutions.

Addressing a meeting to mark the release of ICICI Securities' annual compendium on debt and money markets, Kelkar said, ''The first set of reforms covered the product markets. Now the next generation of reforms would aim at money markets, land market, labour market and institutional reforms''.

The finance secretary asserted that for the first time, the government is talking about privatisation and has shown a willingness to carry forward this process. He added that in this regard, a beginning has been made by starting the process of downsizing the government machinery. He further said the 1999 Exim policy has accelerated the process of dismantling quantitative restriction on trade.

Kelkar said important economic legislation held up due to the current political situation in the country will be cleared after the 13th Lok Sabha is constituted. ''Parliament will pass the IRA bill, FEMA bill, amendment to the Securities Contract (Regulation) Act allowing derivatives and the Government Securities Act by repealing the Public Debt Act."

The finance secretary said that the gold deposit scheme announced in the Union Budget (1999-2000) needed a few clarifications before it can be operationalised. ''First, Parliament has to permit futures trading and some changes in the relating export and import of the precious metal has to be brought about'', he said.

He informed that the government was actively pursuing the strategic sale of its stake in Indian Petrochemicals Corporation Ltd (IPCL) and BALCO.

Speaking on the occasion, ICICI chairman N Vaghul lamented that the lack of an adequate and transparent information base on the financial markets in particular, and the economy in general, was one of the vulnerable points facing the country.

''India figures low in the list of countries that come out with financial data. This is exemplified by the swings in the provisional and final figures in the financial statements of companies. This difference is too large for international investors."

Vaghul further said though interest rates have by and large been deregulated, there is reluctance to do away with regulation of the post office savings rate and 15-day interest rates. ''This creates distortions in the financial sector. Why do we need a complex mechanism of lending rates like STPLR, MTPLR and LTPLR?'' he wondered.

On universal banking, Vaghul said the world over this concept means segregation between investment and commercial banking, but in India it is whether development financial institutions should become banks.

UNI

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