Delay in reforms is inevitable in coalition govt: Pranab

The government has taken major initiatives like the new investor-friendly manufacturing policy, liberalisation of inflows in the capital market and easing of the rules for the companies to raise funds overseas, Mr Mukherjee said

Manila: Sharing concern over slow pace of key reforms in India, finance minister Pranab Mukherjee said that delays are inevitable in a coalition-run government as it has to take on board views of different ruling partners and the process is time-consuming, reports PTI.

However, to boost business sentiment, the government has taken major initiatives like the new investor-friendly manufacturing policy, liberalisation of inflows in the capital market and easing of the rules for the companies to raise funds overseas, he said.

Significantly, Mr Mukherjee said, "Discussions are also underway about decontrolling some of the administered fuel prices."

Addressing a press conference after taking over as chairman of the Board of Governors of the Asian Development Bank (ADB), he shared concerns among a section of the industry and investors over delays in decision-making.

Several key reforms like liberalisation of the voting rights in banks, hiking foreign direct investment (FDI) in insurance and allowing it in the multi-brand retail have been pending for long.

Some of the allies of the ruling UPA coalition have been opposing FDI in retail and other reforms.

"Yes, there has been some delay in some of the crucial legislations, but when you run a multi-party coalition government and when the electorate gives a fractured mandate which limits the powers of the executive... with the mandate that you have to carry others with you... your own views or your own ideas are not adequate unless you carry others with you," Mr Mukherjee said.

Although it is time-consuming and at times to "the point of almost frustration", it is lasting, Mr Mukherjee said, adding that since the economic reforms began in 1991, there is a commitment among the political parties on liberalisation.

Asked about the perception among some of the global rating agencies on India, Mr Mukherjee said they would have captured the mood and other parameters at a particular point of time, but the economic situations keep changing, like it improved in the US.

Last month, Standard and Poor's had lowered the country's sovereign rating outlook on account of fiscal situation.

Mr Mukherjee said the government is committed to addressing important issues like increase in fiscal deficit. "On the fiscal front, we are committed to bring down the subsidy bill below 2% of the GDP in 2012-13. Discussions are also underway about decontrolling some of the administered fuel prices," he said.

Citing strong fundamentals and hopes of revival in business confidence, Mr Mukherjee said the Indian economy would return to the pre-global crisis growth path in the coming years.

"...strong fundamentals of our economy will help us return to a sustained growth path of pre-2008 crisis level in the coming years," he said.

India was growing at over 9% before the global financial crisis of 2008 pulled down the growth rate to 6.7% in 2008-09. India has projected a growth rate of 7.6% in 2012-13, up from 6.9% recorded in the previous fiscal.

Mr Mukherjee said that despite the impact of Eurozone debt crisis on the economy, "India has continued to be a front-runner in terms of economic growth in the region, which underlines the resilience of the Indian economy. The Indian economy is more resilient than many other nations to withstand this fresh round of global economic turmoil, as the bulk of India's GDP is domestic demand driven," he added.


Consensus on NCTC eludes as UPA, non-Congress CMs battle rages on

Notwithstanding appeals by Prime Minister Manmohan Singh and Home Minister P Chidambaram for a broad consensus, non-Congress states rejected the NCTC again

New Delhi: An agreement still appeared to elude the Centre's proposal on the anti-terror hub the National Counter Terrorism Centre (NCTC) with non-Congress states rejecting it as "not acceptable" and opposing it "tooth and nail", notwithstanding appeals by Prime Minister Manmohan Singh and Home Minister P Chidambaram for a broad consensus, reports PTI.

A day-long meeting, convened by the Union government to bridge the differences with the states, especially a dozen non-Congress Chief Ministers who have opposed the NCTC, went on expected lines.

Even Congress ally National Conference voiced reservations over the NCTC in its present form saying it makes it as stringent as the controversial Armed Forces Special Powers Act.

Significantly, opposition BJP leader and Chief Minister of central India's Chhattisgarh state Raman Singh said they would support NCTC if their suggestions are incorporated and NCTC is suitably amended.

Making a strong pitch for the formation of NCTC, the Prime Minister said its establishment is not a State versus Centre issue but will work as a vehicle of country's combined efforts to curb terrorism.

Stressing that NCTC will supplement the counter-terrorism capabilities of the states and not supplant them, Singh asked the state governments to work with the Centre in dealing with terrorism.

In his speech, the Home Minister, the prime mover of the NCTC proposal, said terrorists do not recognise boundaries and the Centre and State governments have to work together to make the country safe and secure.

"We have to work together. With State Governments and the Central Government working together, the Opposition and the Treasury working together, civil society organisations and Government institutions working together I am confident we can make the country more safe and more secure," Mr Chidambaram said.

He pointed out that there are cases where, despite inputs regarding the presence of terrorists, the security agencies concerned did not act either due to lack of capacity or lack of a timely decision.

"Most of these cases concerned so-called 'Jihadi' terrorists and cadres of CPI(Maoists). What should the Central government do in such cases?," he said.

The Home Minister said the NCTC will be an important pillar of new security architecture considering the fact that under the Constitution, countering terrorism is a shared responsibility of the Central government and the State Governments.

UPA constituent and Chief Minister of West Bengal state Mamata Banerjee outright rejected the NCTC saying it was not required. She said setting up of institutions like NCTC with the proposed powers of arrest and seizure upsets the federal structure of the country and strongly urged the central government to withdraw order on its formation as it was "not acceptable" to the states.

Accusing the Centre of behaving like "Viceroys of yore", Chief Minister of Gujarat Narendra Modi said constitution of NCTC is a conscious strategy to cast the Centre as an "omnipresent" ruler with states portrayed as dependent vassals.

Mr Modi accused the Centre of changing the "well-defined and constitutionally mandated" boundaries of Centre-state relations and said there was a disturbing sequence of events in the recent past which revealed "centralists and autocratic mindset that militates against all canons of federalism".

Opposing the NCTC tooth and nail, Tamil Nadu Chief Minister J Jayalalithaa accused the Centre of taking the country towards "autocracy" and demanded that a Sub-Committee of Chief Ministers be set up to go into the proposed body till when it should be kept in "abeyance".

Launching an all-round attack on the Home Ministry, she alleged that Tamil Nadu was being shown "utter contempt" by the Centre which did not even send a copy of the order setting up the NCTC.

Strongly opposing Centre's plan for setting up a NCTC, Bihar Chief Minister Nitish Kumar said the proposal violates the principle of federalism and the structure adopted for it suffers from serious and basic flaws.

Odisha Chief Minister Naveen Patnaik said no democratic country has given wide ranging powers to their secret intelligence agencies and similarly the NCTC should not be a part of the Intelligence Bureau.


Slide to continue: Weekly Market Report

Nifty headed for 5,000-5,045

The market settled lower this week on concerns about the government’s proposed tax reforms, a depreciating rupee and the weakening macro picture. While the market closed in the green on the first day of holiday-shortened week, the losses kept increasing on the latter three days.
The market closed 2% lower in the week with the Sensex losing 303 points at 16,831 and the Nifty settling at 5,087, down 104 points. The market is likely to see a further slide with the Nifty headed for the 5,000-5,045 area.

The market closed higher on Monday on hopes of a stimulus from the US Fed on the back of weak growth in the world’s largest economy. The market sputtered in the second half of trade and settled flat on Wednesday. The losses increased on the last two sessions on domestic as well as global concerns.

BSE IT (up 3%) and BSE TECk (up 2%) were the main sectoral gainers in the week while BSE Capital Goods and BSE Auto (declined 5% each).

The top Sensex gainers were TCS (up 6%), Cipla, Hindustan Unilever (up 5% each), Wipro and Infosys (up 2%). The main losers were Hero MotoCorp (down 9%), Maruti Suzuki (down 7%); State Bank of India, Coal India and Tata Steel (down6% each).

The Nifty was led by TCS (up 6%); Cipla, HUL (up 5% each), Asian Paints (up 3%) and Wipro (up 2%). The losers on the index were Bank of Baroda (down 10%); Hero MotoCorp, Axis Bank (down 9% each), Maruti Suzuki (down 7%) and Tata Steel (down 6%).

The government has proposed to review the Direct Tax Avoidance Convention (DTAC) to incorporate amendments to the DTAC for prevention of treaty abuse and to strengthen the mechanism for exchange of information on tax matters between India and Mauritius. The review will help India to raise revenue from these foreign investments in the country. India is said to be losing more than $600 million every year in revenue because of the tax treaty, ministry of state for finance SS Palanimanickam informed the Parliament on Friday.

After three months of decline, India’s factory output inched up to 54.9 in April, from 54.7 in March. A reading above 50 shows that the sector is growing, while a reading below 50 means the segment is contracting.

Similarly, driven by a rise in new businesses, services sector growth picked up momentum in April to 52.8, up from 52.3 in the previous month, and business optimism hit its highest level since last June, according the HSBC services PMI survey released on Thursday.

Reflecting a slowdown in the economy, the growth rate of eight core infrastructure sectors dipped to 2% in March and 4.3% during 2011-12 on account of poor performance in crude oil and natural gas.

India’s exports surpassed the target of $300 billion for 2011-12 at $303.7 billion while imports touched $488.6 billion on account of rise in imports of crude oil and gold. The high import bill resulted in a trade deficit of $13.9 billion.

On the global front, US markets witnessed their biggest weekly fall this year on weak economic indicators. Eurozone services and manufacturing output contracted more than expected in April, dampening the prospects of a firm pickup in the world economy.


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