Govt steps up reforms
It proposes raising the foreign direct investment (FDI) cap in insurance from 26 per cent to 49 per cent, reports M Rajendran and Deepak Joshi.india Updated: Dec 21, 2006 20:30 IST
Immediately after the close of the winter session of Parliament, the government has stepped up the pace of reforms. The cabinet meeting on Thursday decided on a range of measures that include the government's exiting completely from Maruti Udyog Ltd.
It proposed raising the foreign direct investment (FDI) cap in insurance from 26 per cent to 49 per cent, and increasing the minimum support price of sugarcane to Rs 81.18 per quintal for next year. It also agreed to shortly call a meeting of state chief ministers in a bid to build a consensus on investing the funds under New Pension System in stock markets and mutual funds, besides considering other options.
Other major decisions of the Cabinet finalising a revival package for the ailing Bengal Chemicals & Pharmaceuticals Ltd, instituting a joint electricity regulator for all union territories, except the National Capital Territory and a market access initiative (MAI) Scheme to promote India's exports on a sustained basis.
Briefing newsmen after the meeting, Chidambaram said that the matter of amending of various insurance laws to enable higher foreign equity had been referred the matter to a Group of Ministers.
He exuded confidence that the Bill seeking to comprehensively amend insurance laws would be introduced in Parliament in the first week of the Budget session.
"It (GoM) should not take much time since the KP Narasimhan Committee's report is already there; the views of Law Ministry are there. It should not take more than two sittings," he said.
The changes proposed include, apart from raising FDI in insurance, various other amendments to the Insurance Act of 1999, the LIC Act, 1956 and the IRDA Act, 1999.
The recommendations of Commission for Agricultural Costs and Prices (CACP) for fixing the SMP of sugarcane for 2007-08 sugar season (Oct-Sept) at Rs 81.18 per quintal as against Rs 80.25 given last year has been approved, the Finance Minister stated.
The SMP will be fixed on the assumption of a 9 per cent sugar recovery from cane, he said, adding this would be subject to a premium of 90 paise for every 0.1 percentage point increase in the recovery above that level.
The finance minister said that the centre would shortly call a meeting of state chief ministers in a bid to build a consensus on investing the funds under New Pension System in stock markets and mutual funds, besides considering other options.
"The Cabinet today discussed the issue of investment options under the NPS. It has been decided to call a meeting of state chief ministers so that they could also come on board to offer investment options under NPS on the lines of non-government provident funds," said Chidambaram.
The Cabinet has also given yet one more extension of three months till March 2007 to telecom operators for complying with the foreign direct investment norms as per Press Note 5.
While Chidambaram said, "The Department of Telecom's note on FDI in telecom was discussed in the meeting. It has been referred to a group of officers headed by Cabinet Secretary to redraft the norms with regard to remote access on PSTN (fixed line phone connection)," he did not specify the time limit for extension. However, sources in DoT said that the extension has been suggested till March 2007 by DoT.
The government (Department of Industrial Policy & Promotion under Ministry of Commerce & Industry) had issued policy guidelines as Press Note 5 on November 5, 2005 as part of the review of FDI policy in telecom sector.
The telecom companies were asked to comply with the guidelines by March 2006. However it was deferred by four months, till July 2006, after representations were made by the industry, which sought more time to implement it.
It was again deferred from July 2006 till October 2006. However, in September this year another extension was given till January 2, 2007.