The new team at the Union finance ministry is planning to impart a fresh thrust to economic reforms by initiating a series of sector-specific packages. The "Big Bang reforms" of the 1991 type are now considered neither possible not required. With the first stage of stabilisation and structural adjustment nearing completion, the scope of macroeconomic reforms is becoming limited, necessitating a shift in focus of the central government.
The government is now preparing to impart a sectoral thrust to reforms.
It will provide an enabling environment and a legal and procedural framework to ensure smooth functioning of the labour, capital and product markets.
"The government is likely to give a thrust to reforms on a sector-specific basis. A list of sectors will be shortlisted soon. Instead of an ad hoc policy prescription, the government will have a framework on the lines of that announced for the infotech sector. "The government is planning packages for about 10 sectors which include, textiles, commercial vehicles, petroleum, steel and infrastructure," an official said. Among the key bottlenecks expected to be addressed is the legal and procedural framework. The government's promise to set up an infrastructure ministry is part of this package. The existing framework is believed to be having a major impact on industrial and corporate restructuring which, in turn, is impacting growth.
Components of the package for the financial sector and the equity market are being finalised after finance secretary Vijay Kelkar's meeting with officials of the Reserve Bank of India and financial institutions and bankers in Mumbai.
Bankers provided inputs on ways to improve demand in sectors like cement and steel. "We have suggested to the government to set up a corporation on the lines of Food Corporation of India specifically for the cement and the steel sectors," a banker said.
"If the government can buy or encourage a private sector company to buy excess supply of steel and cement and sell it on a long-term basis, demand can be created. The corporation will set up a minimum price for these products and thus enable creating a demand for the stock. The supplier can then avail of term-loan facilities from banks and institutions which can be also arranged through bill discounting," he added. A paper is expected to be presented to the government soon on the issue.
