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|February 23, 2001||Feedback|
Survey hints at lower interest rate regime
The Economic Survey 2000-01 tabled in Parliament by Finance Minister Yashwant Sinha on Friday, has hinted at lower interest rate regime. The Survey suggests linking interest on pensions and provident funds to inflation rates so that after tax returns reflect market rates and are consistent with the overall demand and supply conditions in the debt market.
Interest rates paid on small saving instruments must be benchmarked against equivalent market instruments.
Rationalisation of labour laws is the need of the hour so that industry can adopt labour intensive techniques. A modern contract labour act should be enacted to encourage outsourcing of services so that new employment is generated. Greater flexibility is essential if Indian industry is to compete with Chinese industry and generate as many new jobs as the latter.
''Time has come to give up reliance on reservation as an instrument to support small scale industry,'' the Survey says.
Inclusion of modern bankruptcy provisions in the Companies Act, repeal of SICA (Sick Industrial Companies Act) and dissolution of BIFR (Board for Industrial and Financial Reconstruction) will facilitate restructuring of the Indian industry.
Conversion of departmental enterprises into companies is essential for infusing them with commercial culture and subjecting them to market incentives and competitive pressures. The identification of ''public sector'' with ''state monopoly'' needs to be replaced by a public sector that is owned by the people.
Shares in these newly formed companies would then eventually be sold to the public, while retaining majority only in companies producing major defence systems. The funds generated from the sale of shares could be used to repay debt incurred by and for them.