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Govt to examine panel report on UTI partner

The government will seriously examine the Y H Malegam committee report, which has recommended a strategic partner for the Unit Trust of India.

The report, which has been submitted to UTI chairman M Damodaran, will be considered by the UTI board on Monday after which it would come to the finance ministry, Rakesh Mohan, economic advisor to the finance minister, told reporters on Friday.

The corporate positioning committee has also suggested that UTI itself be converted into an asset management company. It had further suggested that IDBI and other financial institutions should be asked to scale down stake to a total of 50 per cent. Unit capital now stands at Rs 4.50 billion and IDBI holds just 50 per cent.

US ATTACK

Asked whether there was any inflationary expectation in the light of the US action in Afghanistan, he said a price spiral was unlikely as there was a surplus supply of various commodities while the demand was slack. He cited the instance of oil in this regard.

OIL APM DISMANTLING

Rakesh Mohan said a decision on the issue of floating oil bonds to bridge the oil pool deficit would be part of the process of dismantling the administered price mechanism by April next year. The sub-committees on APM would submit their reports on October 19 and the finance and petroleum ministers would meet on October 22 to finalise a roadmap for APM.

BLACK MONEY

Replying to a question, he said it was a good idea to crack down on black money whose sources were well known. There would not be a general agreement on legitimising black money through a scheme to give a boost to demand and supply of investment and consumption.

RBI

In reply to a question, he said the general direction of the government policy would be to ensure autonomy of the central bank, delinking its regulatory and ownership functions being one such step.

The RBI had set up an informal group to further consider the Narasimham Committee report on the financial sector reforms, from legal and accounting angles.

He said the RBI was planning to divest its stake in institutions regulated by the likes of Nabard, National Housing Board and State Bank of India. This required amendments to relevant acts.

SEBI

Asked whether the Sebi would be issuing guidelines on the recently introduced margin trading regarded as a non-starter, he said this was not necessary. It was for the boards of various banks to decide on investing in margin trading.

The process of demutualisation of stock exchanges was on, but it would take some time. A similar process on the London Stock Exchange took ten years, he said and hastened to add that he did not mean that it would take that much time here.

Asked whether the government was planning a package for small investors who were at a loss to get a reasonable and safe return, he said the real interest prevailing today was in no way less than that available to them in the 1990s as the inflation rate was much higher then.

It was only a temporary, psychological problem of adjustment for the small investor who appeared to be in a state of trauma and uncertainty, fearing further cuts.

He said the small investor never resorted to the equity market, the sole exception being the US-64 scheme of the UTI, and therefore the secular decline in the stock market index had little do with him.

UNI

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