Govt Works On 2-Pronged Strategy

The government is working on a two-pronged strategy, which entails a more active political dialogue, particularly with the G-8 countries , and a series of new policy initiatives to bolster declining foreign investor sentiment.

India is expected to play down its initially belligerent approach and go for more behind-the-scenes negotiations. Though spearheaded by the Ministry of External Affairs, the move is also expected to receive critical inputs from the Prime Minister's principal secretary, Brijesh Mishra.

The diplomatic offensive will seek to persuade G-8 members to soften their hardline stand on multilateral loans to India. At present, all loans to India have been deferred under pressure from the US and some G-8 members.

 

"If we can release the pressure on multilateral loans, it will send a strong signal to the world. However, we don't expect much action for the next three months," a senior government official said.

The government is also planning several policy initiatives. It is slated to come out with bold statements on privatisation _ spelt out for the first time in the Union budget _ especially those relating to strategic sales.

The cabinet is expected to meet this week to obtain clearance for the Insurance Regulatory Authority of India bill. The cabinet sanction will imply clear guidelines for private sector participation _ especially in relation to foreign investment_in insurance.

The industry ministry too has started seeking feedback from various ministries on how the economy can be liberalised further to send "positive signals" to foreign investors.

"We have to send positive signals on economic policy. They need not necessarily be oriented towards foreign investors. We are working towards that direction," a senior official said.

Last week, the principal secretary held a series of meetings with senior government officials in this regard. Among other issues, they also assessed the fact that in the worst case scenario the country stood to lose aid inflows worth about $3 billion.

RBI governor Bimal Jalan met finance minister Yashwant Sinha on Friday. The meeting focused on the external sector and assessed the various economic scenarios.