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Deadlines set to reach reforms milestones
- Ordinance to split UTI into two on Monday; Jaswant promises flurry of steps by year end

Mumbai, Oct. 26: The much-awaited bifurcation of Unit Trust of India is likely to happen on Monday when the Union Cabinet is expected to approve the issue of an Ordinance to repeal the UTI Act.

Standing amid the ruins of stock markets in the financial capital of the country, finance minister Jaswant Singh made this announcement today while setting deadlines for accomplishing reforms tasks in order to placate the frayed nerves of investors and stock brokers.

Disclosing that the Union Cabinet will take up two Ordinances—one to repeal the UTI Act and the other to amend the Sebi Act—on Monday, Singh said while the first one will enable the bifurcation of UTI, the other will give the Securities and Exchange Board of India more teeth to regulate capital markets.

The government, last month, had announced that UTI will be divided into two entities: UTI-I will consist of its flagship scheme US-64 and other assured-return funds, while the remaining schemes which are based on net asset values will come under UTI-II. The government proposes to privatise UTI-II at a later date.

The finance minister also announced that the broad thrust of the forthcoming budget will be announced in the winter session of Parliament as part of the efforts to make budget-making more transparent from this year.

“I hope to present a mid-year budget position of the country to Parliament in November session and along with that we will indicate markers for the future. This will be put on the finance ministry website,” Singh said, addressing the members of the Bombay Stock Exchange on his first visit to the country’s commercial capital after taking over as finance minister.

Singh also said that the government would take a decision within four weeks on Justice Kania Panel report on demutualisation of stock exchanges.

On the establishment of a central listing authority, he said a decision would be taken within 30 days. The Securities Appellate Tribunal would be made a multi-member body and would include retired Supreme Court and high court judges as members.

Singh said the task force on indirect tax reforms which submitted its report yesterday would be placed on the finance ministry’s website on Tuesday for eliciting public opinion. The task force on direct tax reforms will submit its report on November 2, which too will be made public. Both the task forces are being headed by his advisor Vijay Kelkar.

Singh said the finance ministry has asked Sebi and Reserve Bank of India to work closely to implement T+1 settlement cycle for the capital market as early as possible.

“I am trying to encourage them to make it functional earlier than the set date in 2004,” he said.

Referring to screen-based trading in government securities, the minister said such transactions would be permitted in this fiscal itself.

On the issue of turnover tax on brokers, he said the government was bound by certain judgements of the Supreme Court and “the broking community will have to wait till the reports on direct and indirect taxes are submitted to the government.”

Stressing that there was no alternative to free market and reforms, Singh said “free markets along with stronger regulatory mechanism is necessary for effective functioning of the system”.

Without a strong regulatory framework, “we will have incidences/issues arising like vast amount of non-performing assets (NPAs), which is a crime committed on the citizens of India,” he said.

Singh said dynamic capital markets were necessary for economic growth and “government is committed to promoting healthy competition and not monopolies.”

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