Finance minister P Chidambaram announced a string of steps on Saturday to attract more foreign funds. And by obliquely hinting that more measures were likely soon, he triggered speculation about the next phase of reforms.
Speaking at the Economic Editors’ Conference in New Delhi, Chidambaram did not specify the moves the government was “steadily and surely” working on, but there are expectations that the FDI policy may be reviewed to ease the caps fixed for different sectors.
The announcements followed the DMK’s decision to pull out of the government, giving rise to uncertainties over the reforms ahead of the next elections.
First, Chidambaram assured that one of the most important reforms measures, the food security bill, “will be passed soon, possibly in the budget session itself”.
The finance minister also made it easier for FIIs to invest in corporate and government bond markets. The move aims at narrowing the current account deficit — the difference between dollar earnings and payments — that has hit a record high of 5.4% of GDP.
He said, “From April 1, there will be two baskets (for FIIs to invest), one of $25 billion for government securities and (the other) of $51 billion for all corporate bonds” to help FIIs plan their India investment portfolio in a less-complicated manner.
While most of these moves will not require legislative sanction, investors are waiting for cues on politically contentious issues.