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Divestment panel to meet on June 23

India's gross domestic product, or GDP, growth would be above seven per cent in the current financial year, N K Singh, secretary, Prime Minister's Office, said.

Singh also said that a medium-term divestment programme with a tenure of 18 to 24 months is on the anvil. "Divestment is an area where I expect a lot of tangible steps would be taken shortly," he said. A meeting of divestment commission is scheduled on June 23 where a programme and a medium term plan might be unveiled, he said.

Addressing members of the Indian Chambers of Commerce in Calcutta on Thursday, he said, "Fluctuation in the forex market is not a major cause of worry at this time as it is driven by speculation. The current spate of depreciation in rupee value was to some extent an outcome of the mismatch of demand and supply."

"I continue to be optimistic about the current fiscal year. There will be strong revival of manufacturing sector and agricultural sector and strong fundamentals coupled with initiatives taken by government will have tangible effects," he said.

Singh said forecast of a continued 13th good monsoon augurs well for macro economic stability of the country.

His assessment of a seven plus per cent GDP rate in the current fiscal was based on assumption that this year contribution by software industry would be taken into account.

Singh said in the previous year, though officially the GDP was 5.9 per cent, it was actually more than that, considering that the contribution from software was not taken into account.

He, however, said fiscal deficit was the main cause of concern and some factors as reduction in subsidy and downsizing of the government was very much necessary.

''Subsidy is eating up maximum and it cannot be withdrawn in a day or two. We need to build a consensus on how to reduce non-merit subsidies,'' he said and added that very difficult steps need to be taken for downsizing of government. He informed the fiscal responsibility act to reduce government expenditure is almost ready and might be introduced in the monsoon session of Parliament.

''Divestment is not an area that should be delinked from fiscal deficit. It is an area where I expect a lot of tangible steps would be taken shortly,'' he said and added the manner of utlisation of divestment proceeds does not theoretically disturb fiscal deficit.''

He said divestment is not an area that should be delinked from fiscal deficit and proper utilisation of the proceeds would be vital and said," the manner of utilisations of divestment proceeds does not theoretically disturbs fiscal deficit.''

To a question on recent fluctuation in forex market, Singh said it is a temporary phenomenon driven by speculative forces. Rupee will soon stabilise considering overall macro economic factors of the country, he said.

Asked about Videsh Sanchar Nigam Limited monopoly, he said, ''VSNL monopoly cannot be ended just like that because we

have international commitments to honour. This has to be considered in a broader perspective. VSNL's pre-eminent position cannot be eroded."

Incidentally, VSNL, while raising money had indicated in its prospectus that no other company might be allowed in its area of operation before 2004.

Talking about investment in telecom sector, Singh said, "I cannot fix any number, but I certainly see large investment coming into it."

According to him the investment in the sector was slow in coming as investors were awaiting TRAI recommendations on revenue sharing formula before entering into the fray.

UNI

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