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| Victim of politics | | Try a broader consensus on reforms | |
UNION Finance Minister P. Chidambaram has announced further liberalisation of norms for foreign investment in corporate and government bonds. Under the revised norms, applicable from April, foreign institutional investors (FIIs) can invest up to $25 billion in government securities and $51 billion in corporate bonds. This has been done by doing away with sub-limits in various segments. The aim is to bridge the widening current account deficit by attracting more foreign capital inflows. Addressing the National Editors Conference on Saturday, the Finance Minister also promised more reforms.
The departure of the DMK from the UPA has made the coalition government at the Centre vulnerable. It is believed the UPA government may have to shelve reforms unacceptable to its outside supporters, the Samajwadi Party in particular. Though no party has talked of moving a no-trust motion against the government and there are rather signals of support from chief ministers Nitish Kumar and Mamata Banerjee, political uncertainty has spooked the stock markets. The talk of early elections and a third front by Mulayam Singh hit the market sentiment on Monday even though Asian and European markets rallied as worries about the Cyprus crisis eased.
After the DMK exit the UPA leaders have been trying to lift investor sentiment by holding out assurances of stability and reforms. The government raised the diesel price soon after Parliament went in for a break on Friday. The disinvestment process is on track even though stake sales in government-owned companies have been carried out at relatively low prices. The future of the pension and insurance Bills, pending in Parliament, remains uncertain. The political divide over the goods and services tax (GST) has narrowed, but still exists. The Congress hopes to implement the direct benefit transfer scheme countrywide well before the coming general election. While political parties are generally driven by electoral politics, they should try to forge a broader agreement on pro-growth measures and reforms which are for the greater good of the country. (The Tribune) |
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