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Lack of UF consensus hurt reforms, says Chidambaram

Addressing a press conference in New Delhi, he said the bills which were ready to be introduced in Parliament included the Foreign Exchange Management Act bill to replace FERA, the Money Laundering (Prevention) legislation, Hydrocarbon Development and Regulatory Authority bill, and amendments to Mining and Mineral Regulation and Development Act.

He declared that an ordinance would be promulgated soon to expand the size of the Contingency Fund which will take care of the money required for elections and other essential expenses. This would be in excess to the amount already approved, he added.

The finance minister was certain that had the proposed bills been passed by Parliament, they would have changed the country's legal and economic landscape.

He pointed out that though the United Front was a coalition government of 14 parties, it pushed through several significant measures furthering the process of liberalisation.

Regarding insurance reforms, Chidambaram insisted that they continued to be on his agenda, but admitted that the response from the United Front was mixed and even evoked some opposition.

Commenting on the decline of the value of the rupee with regard to the dollar, he stated that supply-demand should determine the value of the rupee. He said that political uncertainty takes its toll on the economy and India was not an exception.

He said that now with the end of political uncertainty, normality was returning to the country.

The finance minister dwelt at length about the measures taken by his government to improve the economy. These were on the fiscal and monetary policies, tax regime, financial institutions, infrastructure financing, current account convertibility, company affairs, public sector, industrial revival, agriculture, irrigation, social development, urban development, labour, science and technology, environment, coal, mining, petroleum, power, telecom, surface transport and Centre-state relations.

The finance minister made it clear that the decisions taken by the cabinet would be implemented.

As far as small-scale industries were concerned, 14 items were dereserved and the scheme of excise duty concessions for SSI units was radically simplified.

Chidambaram declared that a number of steps have been taken for capital account convertibility such as keeping outside the CAC external commercial borrrowing of more than 10-year maturity, liberalising imports of gold for domestic sales, and allowing the Securities and Exchange Board of India-registered mutual funds to invest in overseas markets.

Moreover, exporters and exchange earners allowed to retain 50 per cent of exchange earnings in exporters' external foreign currency account, he added.

Regarding the fiscal and monetary policy, the finance minister said that system of ad hoc treasury bills to finance budget deficit was discountinued and replaced by ways and means advances scheme. He pointed out that the Reserve Bank of India's bank rate has been operationalised as a reference rate while interest rates on all deposits above 30 days had been deregulated.

On taxation matters, Chidambaram asserted that personal and corporate tax rates had been reduced and brought to internationally comparable levels, while the dispersion of excise rates were reduced from 11 to seven with the objective of having only four rates within three years.

For external commercial borrowings, a new window of up to three million dollars was opened for all corporates without end-use restrictions. And holding companies and joint ventures have been allowed to raise capital up to 50 million dollars for infrastructure project.

Chidambaram further stated that in the insurance field, autonomy measures in management and investment have been implemented for the Life Insurance Corporation and the General Insurance Corporation.

Chidambaram concluded by pointing out that for foreign institutional investors, the individual investment limit in a company had been raised from five percent to 10 per cent and aggregate limit from 24 per cent to 30 per cent, subject to shareholders' approval.

UNI