Cabinet secretary TSR Subramanian does not agree that the country is in the throes of a fresh balance of payments crisis, but concedes that the recent liquidity squeeze triggered by the Reserve Banks package to shore up the rupee will affect economic growth in the current fiscal.
There will be a temporary impact on growth. As soon as we are satisfied that everything is under control and that there is no danger, we will roll back the measures, he said in an exclusive interview with Business Standard.
There is no crisis on the BoP side. There is a bit of a slowdown with regard to exports and economic activity. But nothing alarming to my mind... and the fundamentals are strong, he added.
Subramanian maintained that the new government would push through enabling legislative changes to facilitate investments in critical infrastructure sectors.
I would say we have had a 13-party coalition which covered the entire spectrum of reforms. This is a clear signal that whoever comes to power is not going to be very different in their thinking from the present coalition. There may be a change in emphasis, but the broad contours will remain the same. People may not admit it, but there is a national consensus on most issues, he said.
The cabinet secretary said the government was also considering fresh initiatives in guarantees to hasten the financial closure of power projects. One of the options under study is to get Power Finance Corp and Infrastructure Development Finance Corp to act as quasi-guarantors to raise 20-30 year funds at home and abroad.
Subramanian added that the government was looking at fresh initiatives to create a market for long-term debt in the country. This would be based on the recommendations of the committee headed by HDFC chairman Deepak Parikh. The committee submitted its recommendations recently. One of the long-term solutions is to tap the insurance and provident funds. But for this, reforms in this sector are imperative, he said.
In response to a question on government divestment, Subra-manian said, As of now, the thinking is not to do it (Indian Oil Corp GDR issue) in the current fiscal. But I would not rule it out entirely and if the occasion does arise then we will go ahead with it. After all there are only 1-2 months left for the year to end and peoples minds are occupied with other things. So it is not probably not the best time, but, like I said earlier, I am open to correction.
