30 june 2001
100 percent fdi in autos mooted
new delhi-- the heavy industries ministry has proposed to permit 100 per cent fdi in
the auto sector through automatic approvals instead of up to 74 per cent as of now.
unlike earlier, the new policy does not differentiate between cars and commercial vehicles
as far as minimum foreign equity is concerned. foreign equity threshold for motorcars and
multi-utility vehicles will be scaled down to $100 million, as against us $250 million
earlier which amount would have to be brought within the first three years of operations.
the minimum threshold for two/three-wheelers will be retained at $25 million. the existing
fdi threshold for auto investments is $50 million.
the policy retains other conditions such as existing manufacturers would be required to
hike up their investments to the levels prescribed for new companies. it also stipulates
that the mous signed by the existing players would have to be honoured.
several ministries including the finance ministry are strongly opposed to this proposal on
the grounds that there is no need for an auto policy.
montek singh’s strategy to achieve 8 per cent growth
new delhi— member, planning commission montek singh ahluwalia, has suggested a
five-point strategy in order to achieve 8 per cent gross domestic product growth in the
10th plan period, leading to doubling the per capita income in 10 years.
according to ahluwalia the crucial component of the strategy is to effect radical reforms
in the power sector where the state electricity boards suffer 45-50 per cent revenue loss
on account of transmission and distribution including theft involving rs 26,000 crore.
he has also suggested financial reforms particularly in the banking sector. the ratio of
tax revenue to gdp has not grown to the desired extent. he suggested implementation of
parthasarthy shome committee’s recommendations.
pleading for the free moment of goods, ahluwalia suggested enactment of central law to ban
any restrictions imposed on inter-state and intra-state movement of goods by the state
governments and of scraping of essential commodity act, which had outlived its utility.
the agriculture sector, said ahluwalia, must grow at 4 per cent from 3 per cent at present
to achieve 8 per cent gdp growth. the additional growth in the agriculture should be
achieved through diversification. there is also need for stepping up of investment in
rural infrastructure.
ahluwalia strongly advocated elimination non-merit subsidies not targeted to the weaker
sections. he cited the example of railways where passenger fares were cross-subsidised to
the extent of rs 4,000 crore affecting modernisation and expansion the plan of railways.
he also said that subsidies in power, agriculture and other sectors also needed to be
looked at afresh.
ahluwalia said for 8 per cent gdp growth, i.e. 1.5 per cent, increase from the present
level, an additional investment of 5.5 per cent to 6 per cent of gdp would be required.
while household savings are at a satisfactory level, corporate savings have to be stepped
up. however, the worst scenario is the public sector undertakings where savings have
declined from 1 per cent to –1 per cent. this trend had to be reversed by effecting
better fiscal discipline if 8 per cent growth is to become a reality, he added.
29 june 2001
banks allowed to restructure working capital
loans
mumbai—there is good news for banks. in a recent decision the rbi has allowed
banks to restructure their non-performing assets more easily.
