SALON

Thursday, Oct 4, 2012 3:00 PM UTC

Indian Cabinet approves new economic reforms

By

Topics: From the Wires,

NEW DELHI (AP) — India’s Cabinet pushed ahead with a second wave of economic reform proposals Thursday, endorsing higher levels of foreign investment in insurance and pension funds and amendments to laws governing competition, Finance Minister Palaniappan Chidambaram said.

Nearly all of the new measures have to be approved by Parliament, where support is questionable and the governing coalition controls only a minority of seats.

Nevertheless, the government appeared to be focused on keeping up the momentum created by a first round of economic measures announced last month aimed at bringing in foreign investment, strengthening the rupee and reversing the country’s slowing economic growth.

Government officials told reporters before the Cabinet meeting Thursday evening that the decisions being made were crucial; TV news channels spent the day touting the proposals. In anticipation of the reforms, the benchmark Sensex index breached the 19,000 level for the first time in 15 months and the rupee rose above 52 to the dollar for the first time since April.

In the end, the Cabinet agreed to support raising the limit on foreign investment in insurance and pension funds from 26 to 49 percent, Chidambaram said. Business leaders pushed for the increase to bring in a wave of foreign capital that could help the country increase investment in infrastructure and other needed projects.

The Cabinet also proposed modernizing India’s outdated laws governing companies and competition.

The moves come as the government struggles to overcome a growing raft of corruption scandals, policy paralysis and months of bad economic news.

Last month, the Cabinet decided to allow huge multi-brand retailers such as Wal-Mart to own 51 percent of retail stores in the country. It also allowed increased foreign investment in airlines and the broadcast industry.

The government also slightly eased concerns about its huge deficit by decreasing subsidies on diesel and cooking fuel. However, those decisions could be made by the Cabinet directly, and did not need the parliamentary approval required for Thursday’s proposals.

Though an important coalition ally quit over the reforms and Prime Minister Manmohan Singh was left in charge of a minority coalition, the government showed that it could make a risky and decisive move without backing down.

“What really has changed over the last month or so is that the decision-making process has become much faster,” said Samiran Chakraborty, head of research at Standard Chartered, a financial services company. “All these reforms are reinforcing the view that foreign investment is welcome in this country.”

The government has been buoyed by the response to its moves, with business leaders expressing cautious optimism that the nation’s policy logjam may have finally been broken.

___

Follow Ravi Nessman on Twitter at www.twitter.com/ravinessman

More Ravi Nessman.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 0 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

vote
Journalists file suit against Manning's trial secrecy: Plaintiffs including Glenn Greenwald and Julian Assange demand press, public access to trial and documents
124 points125 points | comment
vote
Report: Nearly a quarter of Americans struggle to afford food
115 points116 points | 10 comments
vote
Kaitlyn Hunt refuses plea offer, will go to court over high school relationship - The 18-year-old rejected a deal that would have labeled her a sex offender and placed her under house arrest
72 points73 points | 16 comments
vote
Kaitlyn Hunt refuses plea offer, will go to court over high school relationship - The 18-year-old rejected a deal that would have labeled her a sex offender and placed her under house arrest
73 points74 points | 75 comments
vote
Journalists file suit against Manning trial secrecy: Plaintiffs including Glenn Greenwald and Julian Assange demand press, public access to trial and documents
59 points60 points | 3 comments

From Around the Web

Presented by Scribol
listener_new_rect The Listener: Chekhov's story mirrors Russia's own

Recommendations