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Financial sector reforms on agenda

Special Correspondent

Steps to combat the slowdown by enhancing public investment in infrastructure

— Photo: Rajeev Bhatt

President Pratibha Patil, Prime Minister Manmohan Singh, Vice-President and Chairman of Rajya Sabha Hamid Ansari and Lok Sabha Speaker Meira Kumar arrive for the joint session of Parliament in New Delhi on Thursday. Lok Sabha Secretary-General P.D.T. Achary is third from right.

NEW DELHI: With the Left parties out of the Centre’s decision-making process, the new UPA government is poised to embark on all long-pending reforms in the financial sector along with PSU disinvestment, while initiating measures to combat the ongoing slowdown by enhancing public investment in infrastructure and focussing on the recession-hit export sectors.

Unveiling the government’s road map on policy reforms in pension, banking and insurance as also its sectoral growth agenda and disinvestment in her address to the joint session of Parliament on Thursday, President Pratibha Patil said: “Our immediate priority must be to focus on management of economy that will counter the effect of the global slowdown by a combination of sectoral and macro-level policies.”

“My government will focus attention on sectors that are adversely affected, especially SMEs, exports, textiles, infrastructure and housing,” coupled with “expansion in public investment in infrastructure sectors including public-private partnership in the sector,” she said while noting that the priority areas of reforms would be the pension and financial sectors and disinvestment in public sector undertakings.

Evidently, the government will like to aggressively push the reforms by way of easing the foreign direct investment (FDI) policy, recapitalising some of the state-owned banks and setting up a regulator for the pension sector. “My government will recapitalise the public banks to strengthen their financial position and also bring [in] legislation to establish a regulator for the pension sector,” the President said.

“These [foreign capital] flows, especially foreign direct investment, need to be encouraged through an appropriate policy regime,” Ms. Patil said while stressing the need for augmenting resources of the banking and insurance sectors “to permit them to serve the needs of society better.”

With regard to disinvestment of the Centre’s equity in PSUs, Ms. Patil said that every citizen had a right to own shares of public sector undertakings. “My government will develop a road map for listing and people-ownership of public sector undertakings while ensuring that the government equity does not fall below 51 per cent.”

High growth track

According top priority to putting the economy back on a high growth track, the President indicated that the steps would include expansion of public investment in the infrastructure sectors, apart from encouraging public-private partnerships. “Financing the investment will be a critical constraint and my government is determined to ensure that innovative steps are taken in this area, consistent with the medium-term strategy of prudent fiscal management.”

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