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FM assures counter-guarantee for Vizag project, rupee stability

Union Finance Minister Yashwant Sinha has said the Centre would sign counter-guarantee for the 1040 mega-watt power project promoted by the Hindujas in Visakhapatnam in Andhra Pradesh on tomorrow.

He recalled that the government had signed the counter-guarantee for the fast track Bhadravati power project in Maharashtra and the zero unit project at Neyveli in Tamil Nadu.

Prime Minister A B Vajpayee had decided to review important projects at his level and also mandated on him to clear new projects at his level, Sinha said.

Speaking at an interactive session organised by the Federation of Indian Chambers of Commerce and Industry in Bangalore, he predicted that the devaluation of rouble by Russia, an important trading partner of India, would definitely have an impact on the country's economy.

However, Sinha did not specify the exact nature of the impact, saying that he was not aware of the extent of devaluation effected by the Russian government.

Sinha said that country had also announced a 90-day moratorium on international payments as it did not have adequate funds.

He said with speculation rife over devaluation of the Chinese currency, India should ensure that the rupee value did not fall drastically. The country's economy remained unaffected despite the economic crisis in the east Asian region. Although there was some devaluation of the rupee, it did not depreciate by 80 per cent. "We have our strengths", he added.

The Union government had done a lot more than what the previous governments could do in the last seven years in the power sector, he claimed.

He said the bane of the country was not lack of policies but improper implementation.

He also denied that the Bharatiya Janata Party-led government had slowed down the reforms process.

He said there was no going back on economic reforms and the charge that reforms process had slowed down "is only a perception and there is no truth in it".

Asserting that the government had not undone even a single measure of the liberalisation process that was initiated in 1991, Sinha said all the soft options that were there during the last seven years had all exhausted and the country was now facing the most difficult phase in the liberalisation process in which the core of the reforms process needed to be implemented. The government was taking necessary steps to evolve political consensus to ensure that the process succeeded and generated a lot of confidence among the public.

He further said the fiscal deficit would not be allowed to go beyond 5.6 per cent as projected in the 1998-99 Budget.

He said though there was a feeling that there would be a fiscal slippage, the government would try to achieve the target.

Despite the best of efforts ever since the liberalisation was launched, the government could not contain the fiscal deficit, he said.

Sinha said the Bangalore FICCI meeting is the beginnning of a proposed series of interactions with the trade and industry. He called upon the industry to discard the gloomy picture that is being painted everywhere and start encouraging what he called the "business sentiment".

UNI