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Fiscal deficit will not overshoot GDP target, says Sinha

G Sudhakar Nair

Finance Minister Yashwant Sinha is hopeful that the fiscal deficit for 2000-2001 will not overshoot the targetted 5.1 per cent of the GDP, even as foreign investors called for revamping India's labour laws to make them flexible.

At a meeting on India's economic reforms during the ongoing annual meet of the World Economic Reform (WEF) in Davos on Friday, Sina said that the centre has been "cautious and careful" on the expenditure front to help keep fiscal deficit under control.

The Betting on India meeting which was attended by nearly 80 top executives from various sectors, heard familiar concerns often highlighted by foreign investors while making investment strategies relating to India.

The participants said that the slow implementation of economic policies was a hurdle for investors, who also had to face bureaucratic delays. "India is of great interest for investors, but the problem in India is that it is not yet facilitating enough," one businessman noted.

Sinha quickly intervened to point out that the Strategic Management Group in the Prime Minister's Office (PMO) was vigorously monitoring the implementation of reforms already initiated. A suggestion was made that the pace of taking decisions on new or what is called second generation economic reforms has to be speeded up.

Lot of interest was generated on the demands of foreign investors to rationalise the labour laws in India in order to match the requirements of modern economy. Sinha said that the government was conscious of the calls to revamp labour and industrial laws and that it was looking into the matter.

Several questions focussed on the need to liberalise the labour laws to accord necessary flexibility to both coporates and labour. Labour legislation was cited by foreign investors as one of the reasons dampening investment climate in India, while they wanted provisions for hire and fire according to conditions prevailing in the market.

Sinha was told that investors face problems mainly in three areas and that procedural issues, infrastructure and bureacratic delays were the major road blocks. He said that the government is serious about easing problems in these areas.

The finance minister was confident that India would attract greater foreign investments once the development of the infractructure sector was in place. Foreign investment has been stagnating around $3 billion annually for the past couple of years.

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