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The Cabinet also proposed modernizing India’s outdated laws governing companies and competition.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 Related Stories
- Developers evict historic women's shelter to build luxury hotel
- Kaitlyn Hunt refuses plea offer, will go to court over high school relationship
- DHS admits "impossible" to control 3D-printed guns
- Journalists file suit against Manning trial secrecy
- Russia: Syrian regime ready to talk peace
- Report: Nearly a quarter of all Americans struggle to afford food
- Ted Cruz against the world
- Louie Gohmert: Women should be forced to carry nonviable pregnancies to term
- 2 men arrested for endangering commercial aircraft
- Oversized load blamed for bridge collapse
- This is what Guy Fieri looks like as a balloon
- Iran hackers aiming at U.S. energy firms
- Lawyers release data in attempt to discredit Trayvon Martin
- Anonymous rallies behind Kaitlyn Hunt
- Bridge collapse: Part of "aging infrastructure"
- Mistrial in penalty phase of Arias case
- Amanda Bynes arrested after hurling bong from window
- Interstate 5 bridge collapses north of Seattle
- Mississippi could begin prosecuting women for miscarriages
- Teenage girl claims she was beaten up for looking like Taylor Swift
- UK Military: London attack victim was a "model soldier"
Featured Slide Shows
The week in 10 picsclose X
- 1 of 11
Credit: AP/LM Otero
Credit: AP/Matt Rourke
Credit: AP/Jenny Aicher
Credit: AP/Molly Riley
Credit: AP/J. Scott Applewhite
Credit: AP/Carolyn Kaster
Credit: AP/Las Vegas Review-Journal/Jeff Scheid
Credit: AP/NASA/Chris Hadfield
Credit: AP/Jacquelyn Martin
Credit: AP/The Duluth News-Tribune/Clint Austin
Recent Slide Shows
- 1 of 11