Indian Finance Minister announces additional measures for sustenance of Economic Growth
Close on the heels of tax concessions announced on January 8, 2004 in relation to certain provisions for direct and indirect taxes, the Indian Finance Minister announced on Friday, a slew of measures in a bid to ease exchange control regulations and move towards the capital account convertibility, boost availability of finance for industry, agriculture and infrastructure. These provisions, as reported in the newspapers, are briefly summarized below:
Exchange Control Liberalization
Now, an Indian resident Individual can remit, or take, US$25,000 out of the country, irrespective of the nature of the transaction. Though the fine print of these provisions need to be examined, it is widely reported that the individual can use this money to invest in listed foreign securities.
Indian companies can now make investments up to 100 per cent of their net worth abroad thus lifting the earlier limit of $100 million on them. Existing restrictions on making investments in the agricultural sector abroad have also been removed
Liberalization of the ECB norms
The government has eased the ECB (External Commercial Borrowings) norms for raising funds from abroad by putting it on the automatic route of clearance for five-year projects
Various measures for sustenance of spurt in economic development
The Indian national elections are proposed to be announced any day. Once the elections are announced, the existing parliament will be dissolved. The current finance minister has announced the above summarized provisions as interim policy measures till the next full fledged budget, which would only be presented by the finance minister of the next government after the elections. Meanwhile, there would be a caretaker government which would need some financial support. This will be obtained by the outgoing government by way of "vote on account" from the current parliament before it is dissolved.
Source: The Economic Times and The Indian Express dated January 12, 2004.