The Telegraph
Since 1st March, 1999
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Convertibility consensus in sight

New Delhi, Nov. 25: The government today revealed that the recently concluded G-20 meeting had reached a consensus that all member states needed to move towards full capital convertibility, but in a phased manner.

“The G-20 meeting saw absolute consensus on financial sector reform—we decided to move slowly but steadily towards capital account convertibility. The final goal is fixed but the approach needs to be graded,” finance secretary S. Narayan said at the World Economic Forum here today.

Narayan said that with good macroeconomic management, domestic borrowing costs had declined despite problems with high fiscal deficits. “We have a specific menu for economic reform and we believe that we are on the right path, but only lack in speed. While manufacturing is posting a below 4 per cent growth, we should focus more on our stronger aspects like service, agriculture and knowledge-based industries. Manufacturing, though important, is only 25 per cent of the economy and we can make the other 75 per cent more competitive as we try to shake up this sector.”

Disinvestment secretary Pradip Baijal said the intense debate on privatisation would help the country move towards a more credible and coherent policy. The government has shown how strategic divestment is clearly superior in terms of generating better valuations for public sector companies, he argued. Earlier experience has shown that selling shares in the stock market may not be practical, as the Indian capital markets are not deep enough.

8% growth a dream

Meanwhile, a snap poll of 104 Indian and foreign industrialists by the Confederation of Indian Industry at the WEF showed India had little hope of charting an 8 per cent GDP growth. Fifty-two per cent voted against any possibility of India achieving an 8 per cent growth in the near future, whereas 47 per cent said there was a 50-50 possibility of it doing so. Only 1 per cent of those polled voted positive, stating it would achieve the target.

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