More reforms on the anvil as government protects Sinha
New Delhi: In its bid to accelerate the privatization process, the government has decided to launch a fresh dose of economic reforms. These would include immediate formulation of the convergence legislation and corporatisation of the Department of Telecom Services.

The government’s response has come with the realisation that the present campaing against the finance minister, for having protected the FIIs’ in the recent tax issues, if unchecked could create a "fear psychosis" among FIIs and eventually lead to their withdrawal. Any such inclement response at this stage, when the rupee is already under pressure, the government fears, could plunge the economy into a crisis.

To begin with, a meeting of the Cabinet Committee on Disinvestment has been convened on June 23 to set out the road map for privatisation of the remaining 50-odd PSUs. A day ahead of this meeting, the finance minister will also be chairing a gathering of chief minsters to take stock of the indirect tax reforms, particularly the move towards putting in place a Value Added Tax (VAT) regime.

According to the finance minster, destabilising the stock market and causing a crash will have an immediate impact on the economy, which will in turn impace the rupee. Even during the peak of the East Asian economic crisis, FII investments in India stayed in. In the last one year they have pumped in $3 billion. This will be the surest way of scaring them away.
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