Interest rates may dip further: Kelkar

Kelkar said a further cut in interest rates was on the cards and if the response to the gold bond scheme conformed to the expectation of the government, interest rates would come down sizeably.

The finance secretary welcomed the suggestion about involving domestic institutions in the capital market by investing venture capital funds in grassroot projects. Unit Trust of India was one such venture that could come forward, he stated.

Assocham president KP Singh pointed out that the Budget proposal laid out a well thought-out strategy for fiscal correction. He, however, expressed apprehension that restructuring of businesses in the changed environment would inevitably lead to job losses for which labour laws would have to be reformed.

Appreciating Singh’s concern, Kelkar said the Budget had been framed in exceptionally trying circumstances, considering the fact that the economy was facing difficult international economic environment and economic sanctions.

The Budget, therefore, refrains from adventure of any kind, he said. "We have to remember that as a nuclear power, there are no safety nets available and therefore we have to tread with the utmost caution in framing our policies"

Kelkar favoured the inclusion of a larger number of items for automatic foreign direct investment approval. He preferred to "hasten slowly" allowing investment of provident fund (PF) and gratuity funds in the capital market as he felt that the degree of corporate governance still leaves much to be desired and "one bad case would spell disaster for the market and could ruin investor confidence."