ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Apart from the measures that have been already announced, the prime minister and the finance minister promised representatives of the three apex chambers of commerce and a group of economists at a meeting on December 31 that a series of further measures would be announced within 15 days (this has now been amended to before the prime minister leaves for Davos to attend the World Economic Summit at the end of the month). These pronouncements and promises have been reiterated in the presence of foreign dignitaries including the British prime minister who attended the Indo-British Partnership conference in Calcutta and at special press conferences in connection with the conference. The finance minister has offered the confident assurance that he would achieve rapid fiscal correction in the next two years. 1997 and 1998, something that all foreign agencies including the IMF and World Bank and foreign investors have been pressing for, Admitting that not more than 20 to 25 per cent of the fiscal correction was possible through expenditure control, as Rs 60,000 crore were pre-empted by interest payments and another Rs 9,000 crore each by defence wages and salaries and establishment expenses, the fiscal correction would take the form of reducing tax rates, simplifying tax rules and making more people pay taxes through the threat of stiff penalties. The measures proposed would include lowering of interest rates, taking a fresh look at the minimum alternate tax (MAT) and encouraging domestic industry to play a larger role in the economy. Simultaneously, it has been reported that the cabinet committee on economic affairs has cleared the proposal to phase out restrictions on import of consumer durables on BOP considerations by the year 2001. Apparently the government strategy is to immediately move consumer durables to the list of special import licences (SIL) and then put them on the open general licence. It has also been disclosed through selective leaks to the press that the government is planning to come out with its maiden foreign sovereign borrowing, of about $200-300 mn, in the 1997-98 budget. Apart from legislation on money laundering, the government has promised to introduce amendments to the Sick Industrial Companies (Special Provisions) Act purportedly to tackle industrial sickness in both private and public sectors more effectively. The finance minister has also referred to the reforms introduced in the power sector where by, inter alia, (a) approval of thermal power stations up to 250 M W is to be left to the state governments, and (b) tariffs for the agricultural sector will not be less than 50 paise per kwh, which would be brought up to 50 per cent of the average cost of power generation in three years' time.

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