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Sinha admits IDBI is in trouble -- Sops for stocks, exporters likely

Our Bureau

NEW DELHI, Sept. 27

THE Government is planning another round of sops for exporters and additional measures to pep up the sentiments in the stock market including easier share buyback norms and speeding up the introduction of individual stock futures.

There is progress on the move to introduce labour reforms, following the recent Supreme Court judgement. The Government will introduce the legislation in the ensuing winter session pf Parliament.

It will also adhere to the schedule on dismantling of the administered price mechanism (APM) in petro products. The fisc is, however, likely to come under pressure next year as the burden of subsidies on kerosene and LPG would be taken on by the Budget.

In his first major interaction with presspersons after the terrorist attacks on the US, Mr Sinha expressed optimism about an ``improvement in the overall economic situation in the second quarter''. He also held that inflation would be within the range of 5 per cent.

For the first time, the Finance Minister cautioned about the trouble brewing in IDBI. ``We will look at the finances of IDBI to ensure that they are on the right track'', he said.

Mr Sinha held that his Ministry would shortly firm up its views on the Commerce Ministry's proposal to remove value caps on 600 items under the Duty Entitlement Pass Book (DEPB) scheme and reduction of duty drawback rates on some export items to the posi tion as it stood on June 1. The Exim bank is also in the process of firming up measures to improve market access to various destinations.

Mr Sinha said that his Ministry had resolved the differences with the Department of Company Affairs (DCA) on easing the share buyback norms. The DCA had expressed apprehensions over a possible manipulation of share prices by some corporates if easier buy back norms were permitted. ``we have arrived at a consensus'', he said.

While conceding that the introduction of individual stock futures would help boost market sentiments, Mr Sinha also held that a great deal of caution had to be exercised on the matter. The Securities and Exchange Board of India (SEBI) has already given a n in principle approval to this product for 31 scrips in which options are being permitted.

Only last week, the Reserve Bank of India (RBI) had allowed FIIs to increase their holding in Indian companies upto the sectoral caps/ statutory limits. ``We have introduced the measure, but no one is hopeful that it would immediately boost the stock mar kets'', he said, adding that additional measures were in the pipeline.

The Finance Minister also held that FIIs which have their portfolio investments in the country are not fly-by-night operators. They did not exit ``at the height of the East Asian crisis and I hope they will not do so now''.

On a further cut in bank rate to stimulate the economy, Mr Sinha reiterated that it was in the domain of the Reserve Bank of India. ``The Indian interest rate regime is now soft and it is up to the RBI to look at the totality of the situation and take a view'', he said.

While admitting that the slowdown was a cause for concern, Mr Sinha also maintained that the second quarter ``may not be as bad as the first quarter''. He also held that it was too early to talk about fiscal deficit. Things will look up on the tax front and ``we will try to come closer to the Budget targets''. He was of the view that the time had not come for full convertibility of the rupee.