Finance minister P Chidambaram on Thursday moved to win back market confidence by pledging new reform measures to boost growth, saying that the government will soon decide on coal and gas pricing, and review foreign direct investment (FDI) caps in various sectors including defence.
The minister, with an eye on the weaker rupee that could be aided by foreign fund inflows, also indicated that market regulator SEBI will soon consider a report that aims to simplify categories for foreign portfolio investors.
He also said that Prime Minister Manmohan Singh will soon hold a meeting with all stakeholders and key advisers to discuss steps to boost investment.
However, his assertions failed to arrest the decline in rupee, which fell to 58.48 against the US dollar against its close of 57.79 on Wednesday.
Chidambaram’s words were overwhelmed by a rout in the world markets that triggered across-the-board selling and pulled the benchmark Sensex down by 214 points, or 1.1%, to 18,927. The index ended below 19,000 for the first time in nearly two months.
However, the finance minister said there was no need to panic over the depreciation of the rupee and policymakers would take steps to curb volatility.
"I am looking forward to more reforms...in June, you can expect a number of decisions taken and implemented that will accelerate reforms," he said.
Chidambaram, who was addressing a news conference a day after rating agency Fitch revised its credit outlook for India from negative to stable, also said he would hold a meeting with chiefs of public sector banks soon to discuss the issue of reducing lending rates further.
He pointed out that while the Reserve Bank of India has already brought down policy rates by 1.30 percentage points since January 2012, banks, which have cut lending rates by 0.30 percentage points, have only partially passed on the benefits to borrowers.
"I have called the chairpersons of public sector banks towards the end of this month and have a chat on these issues...I think they are cautious. Caution is good, but you can’t be over-cautious," he said.
He also said the Securities and Exchange Board of India (SEBI) would soon take a decision on rationalisation of foreign investment norms at its next board meeting slated on June 25.
The KM Chandrasekhar Committee report suggested a host of measures including simplification of registration process for foreign investors and classifying them into a single category to attract more capital inflows. "We are in favour of KM Chandrasekhar Committee report."