Eurozone crisis has hurt global investment; India is no exception: FM
New Delhi: Announcing further liberalisation of FII investment norms, Finance Minister P Chidambaram on Saturday said the government is "steadily and surely" working on next generation of reforms to put the economy back on high growth path.
Addressing the National Editors Conference here, he said with liberalisation of FDI and other measures, the government has travelled considerable distance on the road to fiscal consolidation and reforms.
In further liberalisation of norms for investment by Foreign Institutional Investors (FIIs) in government securities and corporate bonds, he said norms have been rationalised.
"There were a number of sub divisions and in order to rationalise, it is proposed to merge the existing sub limits and create only two broad categories," he said.
One category of basket, he said, will consist of government securities of USD 25 billion and the second basket will consist of all corporate bonds of USD 51 billion.
"Therefore from April 1, there will two baskets, one of USD 25 billion for government securities and (the other) of USD 51 billion for all corporate bonds," he said.
Promising more reforms, Chidambaram said that "we are steadily and surely working on next generation of reforms".
The recent economic reforms include liberalisation of foreign direct investment (FDI) norms in multi-brand retail and aviation, partial deregulation of diesel prices and caping supply of subsidised LPG.
Referring to the Food Security Bill, Chidambaram expressed confidence Parliament will soon pass it.
"I am confident it (Food Security Bill) will be passed soon by Parliament, possibly in the Budget Session itself," he said.
To a query regarding West Bengal Chief Minister Mamata Banerjee's allegations that Centre was discriminating against the state in allocation of funds, the Finance Minister said funds are allocated to states as per the constitution and recommendations of the Finance Commission.
"...No state is preferred, no state is discriminated against...Charge of discrimination is wrong and I reject the charge," Chidambaram said.
The Minister further said that he has never favoured the idea of special package for states.
However, he said, the new Finance Commission has been asked to look into the problems of debt stressed states and advise government on how to deal with them.
Chidambaram also announced that the current SEBI auction mechanism allocating debt limits for corporate bonds will be replaced with the system similar to the infrastructure bonds.
"In order to allow large investors to plan their investments, government will review the foreign investment limit on corporate bonds when 80 per cent of the current limit is reached," he said, adding the limit on government bonds will be enhanced as and when needed.
However, in order to provide a guide to investors, he said, "I am happy to state that the annual enhancement of the government bond limit will remain within 5 percent of the gross annual borrowing of the central government excluding buybacks".
Referring to global economy, the Minister said the eurozone crisis has impacted investment around the world and India was no exception.
"The risk to global stability is the eurozone crisis. There is no definitive solution still in sight," he said adding that this has led to sharp deceleration in exports.
It may be recalled that the economic growth has come down after touching 9.3 percent in 2010-11. The economy grew by 6.2 percent in 2011-12 and is expected to grow at a decade low of 5 percent in the current fiscal.