“Government is committed to introduce reforms in the financial sector. But we have to adopt a cautious and calibrated approach towards further liberalising the regime governing capital account convertibility of rupee,” Planning Commission Deputy Chairman Montek Singh Ahluwalia said at the Economic Editors Conference being held here.
Making rupee fully convertible to woo short-term capital from overseas can always lead to volatility, he said. “Our current approach of having a restricted regime on capital account convertibility of rupee has helped us keeping our economy insulated against any type of global financial crisis,” he said.
Keeping a tight control over external debt has also helped the economy withstanding adverse effect of any sort of financial crisis at the international level, Ahluwalia said.
The overall strategy should be guided by principle of opening up the convertibility of rupee on capital account gradually, he said. However, Ahluwalia said “as far as reforms in other segments of financial services like banking and insurance are concerned we have a lot more to do.” “It will be a serious mistake if we do not go ahead with reforms in the financial sector like banking just because of the ongoing global financial meltdown. We can go ahead with reforms in these areas after making in-depth study,” he suggested. So far whatever reforms the country has introduced in the financial sector like banking and insurance, it has carried forward the factor of stability, Ahluwalia said adding “our future reforms should further strengthen the stability of our financial system.” In reply to a query on PSU disinvestment the Plan Panel Chief strongly vouched for “aggressive” disinvestment.
“Firstly, we should pursue PSU disinvestment aggressively. Secondly the proceeds from the disinvestment should be used for new investment,” Ahluwalia suggested.
The modalities for expediting PSU disinvestment and utilizing the proceeds of the disinvestment in new projects should be evolved by the Finance Ministry, he suggested.
Export sops
The government will come out with a new stimulus package to boost export if it is necessary, Commerce Minister Anand Sharma indicated on Wednesday. “We are open to the idea of coming out with more packages to promote export, which is currently being hit by the global slowdown,” he said at an interactive session with the Economic Editors Conference here.
“I have asked the Commerce Secretary to conduct a review across sectors regarding the impact of the (stimulus) measures taken on various segments of the export. By middle of this month we hope to complete the assessment,” Sharma said.
The government is committed to provide additional assistance wherever it is warranted, he asserted. Sharma said various policies and incentives of the government had benefited exporters who have been reeling under the demand slowdown since October, 2008.