Fiscal situation under strain: Sinha

By Our Special Correspondent

NEW DELHI, OCT. 16. The fiscal deficit for this year will not be far from the budget target of 4.7 per cent, the Finance Minister, Mr. Yashwant Sinha, said today, even while conceding that the fiscal situation was ``under strain,'' following the tense global environment after the September 11 terrorist attacks on the U.S.

Though Mr. Sinha, inaugurating the annual Economic Editors Conference, organised by the Press Information Bureau, did not share the ``alarmist projections'' about the fiscal deficit going awry, he did point out that several sectors would be adversely affected by the post-attack situation and the conflict in Afghanistan.

Other areas which could possibly be affected by the ``international instability or sense of uncertainty'' included tourism, civil aviation, exports and the oil sector, where a watch was being kept for world price fluctuations.

Mr. Sinha stressed that ``reforms are not on hold.'' Second generation reforms like labour market reforms were the most difficult to implement but a legislation in this direction would be introduced in the winter session of Parliament.

On reforms in the financial sector, he said a law was being considered to give more teeth to the banks to realise non- performing assets (NPAs) and bring defaulters to book without having to go through the legislative route.

An advisory group was being set up to give suggestions on areas which required legislations and those where reforms could be effected without amendments. The group would include the chairman of the Telecom Regulatory Authority of India (TRAI), Mr. M. S. Verma, Mr. Deepak Parekh of the HDFC, Mr. K. V. Kamath of the ICICI, Mr. Ravi Narayan of the National Stock Exchange, Mr. Ravi Mohan of Crisil, Mr. C. Bhave of the NSDL, Dr. Omkar Goswami of the CII and the Finance Ministry's Economic Advisor, Dr. Rakesh Mohan.

On the changing role of development financial institutions (DFIs), he said the ``hands-off'' policy was now becoming ``hands-on.'' A decision would be taken soon on the proposal for universal banking.

Denying any repayment problems for the Industrial Development Bank of India, he said the problems being faced by the IFCI were being addressed.

Asked about steps to pump-prime the economy, he said a series of ``last mile'' projects had been identified which required funds for completion.

The Finance Secretary, Mr. Ajit Kumar, hinted that the Government might opt for a system of oil bonds while dismantling the administered pricing mechanism for the petroleum sector.

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