| Firm Ground beneath his feet
May 27: The sharp volatility in the stock markets — epitomised in the Black Monday crash — has made the Congress-led government sit up and take note. It has warned of strict action against “manipulators” and promised to strengthen the market regulator to protect retail investors.
“Interests of small investors will be protected and they will be given new avenues for safe investment of their savings,” the government said in its Common Minimum Programme (CMP).
“Strict action would be taken against market manipulators and those who try to deliberately engineer market panic,” the government warned. The alliance will also reduce the vulnerability of the financial system to the flow of speculative capital.
The CMP has promised more powers to the Securities and Exchange Board of India (Sebi) and support to foreign institutional investors (FIIs). “The United Progressive Alliance is deeply committed, through tax and other policies, to the orderly development and functioning of the economy. The financial market will be deepened,” it said.
The government today said foreign direct investment (FDI) would be actively sought in certain areas since India could absorb two to three times of the present level of FDI inflows.
“FDI will be encouraged, particularly in infrastructure, high-technology sectors, exports and where local assets and employment are created on a significant scale,” the CMP said.
The government will take all steps to revive industrial growth and put it on a “robust footing”, through a range of policies, including de-regulations. Incentives to boost private investment will be introduced and India Inc will be extended all support to become more productive and competitive.
“Regulatory institutions will be strengthened to ensure that competition is free and fair,” the government said.