The government plans to announce a review of the foreign direct investment limits as also coal pricing and allocation to power plants and gas pricing by the end of June, Finance Minister P. Chidambaram told reporters on Thursday.
The various measures taken by the government since last September have yielded significant results and the government is looking forward to more reforms in the coming days, he said, adding that the government is encouraging every ministry to accelerate spending early.
Mr Chidambaram noted that net gold imports have fallen from an average of $135 million in the first half of May to $36 million in the second half of last month, adding it should have a positive impact on markets.
He added the performance of crude oil, natural gas and fertiliser sectors are key concerns for the government.
He also welcomed Wednesday's measures from the market regulator to increase government debt limits for long-term investors, and said Indian bond yields should still attractive to foreign investors.
However, the rupee extended its decline following comments from Mr Chidambaram as he failed to announce any clear and strong measures to arrest the sharp decline in the rupee seen in recent weeks.
At 10:26 a.m., the partially convertible rupee was at 58.24/25 per dollar, after hitting 58.27 and down further from 58.12 levels before the finance minister started speaking. The unit had ended at 57.79/80 on Wednesday.
"He speaks about concerns, the market is already concerned and so far there are no definite plans or decisions," said Hari Chandramgethen, head of foreign exchange trading at South Indian Bank.
Key comments:
On economy:
Appeal to take a long term view of India. Looking forward to more reforms. Economic revival a slow, painstaking process, but will yield results. Expect more steps in next few days, few weeks. Number of decisions likely in next few days. Have told every ministry to accelerate spending. Will also achieve revenue targets for FY14. Will achieve fiscal deficit target. Coal India on list of FY14 divestment programme. All divestment proceeds to go into capital investments. To use divest proceeds for capital infusion in PSU banks.
On investments/industries:
Identifying up to 40 projects for fast track clearance. Real concern about three industries - crude oil, natural gas and fertilizer. Last year these three recorded negative growth rate. Priority to fix the growth rate of these three industries.
On rupee:
Rupee taking a hit due to high current account deficit, but there is no reason to panic. All countries with high CAD have taken a hit. Rupee will find its level. We are concerned about the volatility. Outlflows partly due to fall in gilt yields. Indian markets offer best yield in the world.
(With inputs from Reuters)
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