One of India's leading industry associations, the Federation of Indian Chambers of Commerce and Industry (Ficci), has urged the government not to lose track of the reform process and has called for a renewed focus on them with special emphasis on capital market reforms.

Speaking to the press Mr Chirayu R Amin, president Ficci said, "As an emerging regional economic power, India is on the watch list with its economic performance constantly under the microscopic watch of analysts from Wall Street to London Stock Exchange. Since India opened up, global investors have been taking deep interest in the country."

He said that between January and March 2001 almost Rs. 7,000 crore has come into the country through FIIs, which have been active on Indian stock exchanges. He said since future inflows were equally important, it was imperative that India presses ahead with its reforms program.

In response to a question from by domain-b Mr Amin said, "I agree that the recent probe initiated by Sebi should be much wider and cover a period of at least two years. I agree with domain-b that Sebi should look into the supply of shares which has caused the markets to slide continuously since early March last year." Mr Amin assured domain-b that he would sound off Ficci's capital market committee headed by Naina Lal to understand the modus operandi. He also agreed that the culprits should be bought to books and punished severely.

Mr Amin said that notwithstanding the recent political crisis, the government will have to pursue reforms and more importantly implement them. "We must distinguish between routine reforms, which enjoy larger consensus among political parties and reforms, which have considerable opposition from different interest groups. However it is incumbent that in the larger and wider interests of the country, we have to devise ways of giving effect to those critical reforms and measures like divestment or labour laws. These are preconditions to India achieving a higher growth trajectory."

The Ficci chief underlined the importance of introducing radical reforms in the capital markets without which the disinvestment process cannot be implemented. He said it was important to take a fresh look at the regulatory mechanism for the entire financial sector.

According to him the confidence of the retail investor had virtually vanished, battered as they are by the bulls and bears. He added that it was the essential task of the authorities to restore their confidence. For this he said the capital markets will have to be modernised and its operations made more transparent. Finding flaws with the working of Sebi Mr Amin said that the regulator must develop additional skills to detect market developments instead of waiting for things to happen. "The stock market functioning should also reflect the fundamentals of the economy."

He reiterated that reforms of the capital market is of critical importance now as Indian industry will have to increasingly depend on the markets for meeting its funding requirements. Macro-economic reforms and a more focussed attention on capital market should be the two pillars of action to rejuvenate the economy and restore the feel-good factor.

"Only this kind of a two-pronged strategy will only help stimulate investment and growth", Mr Amin said.