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Sinha For Urgent Reform Measures To Revive Growth, Sentiment
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Calling for an urgent need to revive investor sentiment to revive the faltering growth, Sebi Chairman Upendra Kumar Sinha said, "Some of the reforms, which have long been pending, and one example being pension reforms... it has been years and years that some of these reforms...are yet to come through."
"And that is something all of us have to counter very seriously, that how long can we go on deferring this?"
Addressing the Skoch summit here Friday morning, Sinha said the country has still time to tide over the present growth deceleration if we move ahead with some of the urgent reform measures and resolve the issues plaguing the implementation side.
"If we start making some progress on these things (reforms), then in spite of the forecast about our economy coming down from the higher levels of 2007-08; if these policies change ... start happening, we can again come to levels which are commendable in comparison to any part of the world. But those changes have to take place," he said.
The GDP growth hit a nine-year low in FY12 at 6.5 per cent due to a number of reasons, which many cite as policy paralysis and lack clarity on policy.
This has led to almost all the foreign banks and analysts such as Goldman Sachs, Morgan Stanley, Citi and HSBC, among others, to lower FY13 GDP growth to a low of 5.8-6.3 per cent.
Admitting that a part of our problems are imported, Sinha, however, said, "We cannot become complacent about policy making and implementation domestically."
Stating that there is no reason why even private parties are not able to implement their projects on time, he said, "I am bewildered that if an agreement has been signed between a raw material supplier and a utility, why it is not being honoured."
According to a CMIE estimate, as many as Rs 5 trillion worth of projects, mostly in the power and steel sectors and running into 500 projects, were stalled in FY12 due for want of mandatory clearances, fuel, raw material linkages, etc.
Listing out the reform steps that are needed urgently, he said, "We all know what happened to FDI in retail, the PFRDA Bill, and the pension reforms are yet another examples.
"Passing the PFRDA Bill is not an end in itself, in my view it will serve a purpose, but a limited one. The more important thing is the largest pension funds in the country, which are being managed under a Central law, are they being reformed or not? The Pfrda Bill will not reform that," he said.
On Thursday, the Indian government deferred the Pension Bill, that seeks to open up the sector to foreign and private investment, as the key ruling front ally Trinamool Congress put a spanner on the Regulatory and Development Authority Bill of 2011.
Noting that the EPFO has 40 million accounts amounting to a whopping Rs 2,00,000 crore in funds, Sinha said, "If a small portion of that money starts coming into the market, (it means a lot, but) that money is not coming, that reform is not happening."
Regretting that the high interest rates that the EPFO offers is hurting the whole sector, he said the corporates which manage their own pension funds are not able to match the interest rate announced by the EPFO and have to fund it by themselves.
On the insurance front, he said the proportion of foreign investments is not increasing.
Last week the government had also decided against increasing the FDI cap in the insurance sector which is currently pegged at 26 per cent.
On the tightening of the IPO listing norms, Sinha said the volatility which used to happen on the opening day has come down since the new norms were implemented.
"We've started this concept of call-auction in the pre- open market, (earlier there was high volatility on the listing day) after which there have been four IPOs, and our feedback is that all four of them have been free from any such managed volatility and the numbers have come down substantially," he said.
Later talking to reporters on the sidelines, the Sebi Chairman said FIIs want to understand whether there is a slowdown in policy-making and growth.
On the new consent order norms, he said, "We have highlighted how particular cases are to be treated under the new Consent guidelines."
Last month, the Sebi had revamped the widely criticised consent mechanism, which earlier used to give a lot of leeway to corporates.