Joining the government, the Reserve Bank sent assuring signals to the market by indicating that it may further cut interest rates later this month. While the Prime Minister said the country should "stay course" in difficult times, Finance Minister Pranab Mukherjee listed positives in the falling crude oil prices and expectations of a normal monsoon.
The markets reacted well to these remarks even as global stocks came under pressure. After plunging over 200 points to its lowest level in five months, the Sensex closed 23.24 points higher. Addressing the tax officials, Mukherjee, however, said there is no headroom for fiscal support. With projects worth Rs 1.46 lakh crore pending, the Prime Minister will review with senior Cabinet colleagues the status of the infrastructure sector.
Projects worth Rs 1.46 lakh crore are pending because of absence of regulatory clearances. These are in the sectors of power, steel, highways and cement. The meeting assumes significance as it comes against the backdrop of economic growth falling to nine-year low of 6.5 per cent in 2011-12 and contraction of industrial output in the March quarter.
Singh has also approved formation of a nine-member ministerial panel to sort out differences over the draft Bill for setting up a regulatory authority for the coal sector. "The Prime Minister has approved the formation of a Group of Ministers (GoM) (to look into the draft Bill). The government has notified the formation of GoM today," a top Coal Ministry official told PTI.
Mega projects like USD 12-billion Posco steel project and USD 90 billion Delhi-Mumbai Industrial Corridor are also delayed on various counts like clearances and land acquisition. The PM`s review comes close on the heels of his decision to set up the Investment Tracking System to monitor the status of projects of Rs 1,000 crore and above. Meanwhile, the Finance Ministry has also called a meeting on June 7 to resolve the issues relating to the foreign direct investment proposals in the pharmaceutical sector.
The government had also set up on Sunday a high-level inter-ministerial board under Commerce and Industry Minister Anand Sharma to boost the manufacturing sector. Addressing the Congress Working Committee, the Prime Minister said, "These are difficult times for our country and for our economy, caused to a very large extent by circumstances over which we have little or no control. "These are times when our will and determination are being tested," he said, adding "we must stay the course" and "have faith in ourselves".