New Delhi: With its term winding to a close, India’s ruling Congress-led United Progressive Alliance government cleared critical Bills, and pushed through key decisions, including scrapping Indian Railways’ ambitious attempt to partner with private firms to make diesel and electric locomotives and imposing restrictions on sugar trade in the light of hardening prices.
Briefing the media after the meeting of the cabinet as well as the cabinet committee on economic affairs (CCEA), home minister P. Chidambaram clarified that the government was yet to take a decision on whether it would extend the cuts in excise duty effected in January and due to expire on 1 April.
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The meeting also saw the cracks widening between ministers on contentious changes in foreign investment rules announced earlier in February. A senior minister in the cabinet, who spoke on condition of anonymity, revealed that some members of the cabinet questioned the propriety of effecting such significant changes to foreign policy in such haste.
After poor response from private sector firms to projects to manufacture diesel and electric locomotives in Bihar, the government has decided to go ahead with the two projects, worth at least Rs20,000 crore as in-house ones.
Apart from clearing the tracks for rail minister Lalu Prasad’s pet project for his home-state Bihar, the cabinet on Monday cleared amendments to the Right to Education Bill and made significant changes in rules governing employee insurance to bring unorganized sector employees within its purview.
It also approved Japanese telecom firm NTT DoCoMo’s investment in Tata Teleservices and Tata Teleservices (Maharashtra) Ltd.
Although analysts had predicted the unveiling of a relief package, the third after two so-called stimulus packages announced in December (Rs31,900 crore) and January (Rs20,000 crore),the government didn’t do this on Monday and instead, merely endorsed the Rs450 crore package for exporters announced in the budget. However, chances of a cut in key interest rates by the Reserve Bank of India remain.
Last week, India’s foreign minister Pranab Mukherjee, who also has temporary charge of finance, said he would discuss the possibility of another set of fiscal and monetary (relief) measures with his team and RBI to counter the global economic slowdown.
Late on Sunday, RBI governor D. Subbarao met Mukherjee and told him that the central bank was monitoring the country’s economic situation and that it would take action as necessary.
India’s growth has fallen from at least 9% in the past three years to an estimated 7.1% in 2008-9. Factory output in the country has fallen too, but so has inflation, setting the stage for a possible cut in interest rates by RBI.
Elections are scheduled to be held by May.
Asit Ranjan Mishra, Maitreyee Handique, Sangeeta Singh and Anup Roy contributed to this story.