new delhI, OCT 23: The government will soon make foreign direct investment approvals automatic virtually in all sectors and set up a implementation authority for speeding up such projects, Finance Minister Yashwant Sinha told a FICCI meeting here today."We will soon formulate a transparent FDI framework," he said, adding "we want to have an automatic route for FDI in most of the sectors and approvals should be only for projects that are outside this framework". This will also obviate the need for the Foreign Investment Promotion Board.Voicing deep concern over the sluggish flow of foreign investments, Sinha said the government would create an implementing authority to speed up the projects that have so far been marred by procedural delays. "The only way to attract FDI is to keep us (government) out from the decision making process," he said adding FDI should be free from all kind of approval procedures that can push up the implementation".Interest rate cut: Sinha said interest rates could notbe lowered without effecting a drastic reduction in government borrowing and lowering of bank deposit rates."If the government borrows at high rates, how can we expect the interest rate to come down," Sinha said adding however, he favoured moving towards a low interest rate regime. Sinha's statement follows persistant demand from industry bodies for a reduction in the interest rate through a cut in cash reserve ratio and bank rate.However, bankers are not optimistic about a reduction in government borrowings. "The government's borrowings have been going up all these years," said a banker. He said it was the responsibility of the government to create necessary atmosphere and environment for RBI to effect any cut in rates. He said subsidies meant for poor could not be done away with but there was an urgent need to streamline various other subsidies straining the country's fiscal health through a broad political consensus. "Subsidies directly benefiting the poor in the country cannot be done away with. Wecan only streamline the procedures governing various subsidies through political consensus," he said in response to suggestions from industry that government should put a moratorium on new subsidies and phase-out existing ones.Disinvestment: On disinvestment, Sinha said he was against using the proceeds for current consumption and meeting revenue needs. "If we do this, we are doing a disservice to the country and exposing ourselves to the charge that we are selling family silver to make both ends meet," he added.Sinha said the purpose of privatisation and disinvestment should be to create new assets and retire high cost debts. The Finance Minister observed that so far there has been a causal approach towards disinvestment. "We have only scratched the surface of this problem," he said adding since the disinvestment proceeds were small there had been no accountability in its utilisation and the funds were largely utilised in meeting the budget deficit of the government.Sinha said there would begreater accountability towards the people when the proceeds run into thousands of crores and added that when the proceeds are thousand crore and less the utilisations are not strictly monitored. He said the government would give a push to the public sector disinvestment and privatisation "by connecting it with a holistic PSU reform programme."
