In an effort to re-energise the economy in a big way, the Prime Minister, Manmohan Singh, today announced a slew of measures for oil, coal and power sectors.
At the same time, he also announced intention to roll back fiscal stimulus announced in 2008.
Addressing the annual general meeting of industry chamber CCI, Singh said, “The most important thing we can do to revive the investment climate domestcially is to deal with the many impediments affecting the implementation of infrastructure projects.”
With this, he announced giving final clearances to 31 oil blocks in the next two weeks.
“Clearances for 12 coal mining projects have also been fast-tracked. These projects would add 37 million tonnes to our annual coal production,” he said.
Power projects
Talking specially about problems in power projects, he said that the problem of fuel supply-both coal and gas, to power projects has been posing problems.
“The Ministries are working to reach a resoution to these problems in a timebound manner. I hope we will see results in next three weeks,” Singh said, while adding that the Land Acquisition and Rehabilitation and Resettlement Bill has been cleared by the Cabinet and will soon go to Parliament.
More FDI reforms
Giving indications about more reforms for foreign investment, the Prime Minister said that foreign investors should be encouraged to use India as a part of their global supply chain. ”The liberalisation of FDI in multi-brand retail, civil aviation and other areas, are important signals. We are reviewing the FDI policy comprehensively to see what more can be done in the coming months,” he said.
Stimulus and deficit
Singh suggested dealing with domestic problems by restoring macro-economic balance. “Over the last several years, our fiscal deficit expanded to a level which is simply unacceptable. This is partly because of a conscious policy of fiscal stimulation, which was followed by many countries.
Most countries that followed this policy are now reversing the process. We must do so also.” He emaphasised that the Finance Minister tried to do so in this Budget. Now there is target to reduce the fiscal deficit by half a per cent in 2013-14 and continuous reductions of that order each year, up to 2016-17. “We are determined to do everything possible to achieve this target,” he assured industry captains.
Showing concern on rising current account deficit, the Prime Minister said that this deficit is expected to be around 5 per cent of GDP. This is more than twice the traditional comfort level of, say, 2.5 per cent. Some reduction in this deficit is expected in 2013-14 as there is lower target for fiscal deficit and also the lower subsidies on petroleum products. Initially, this reduction will be modest.
“We must, therefore, plan to finance a higher than normal current account deficit in our Balance of Payments for a few years. We financed a CAD of over $90 billion in 2012-13 without a loss in our foreign reserves. We will take all steps to ensure that inflows remain strong for the next two years,” he said.