Indian Cabinet approves new economic reforms
NEW DELHI (AP) — India's Cabinet pushed ahead with a second wave of economic reform proposals, endorsing higher levels of foreign investment in insurance and pension funds and amendments to laws governing competition, Finance Minister Palaniappan Chidambaram said.
Nearly all of the new measures have to be approved by Parliament, where support is questionable and the governing coalition controls only a minority of seats.
Nevertheless, the government appeared to be focused on keeping up the momentum created by measures announced last month aimed at bringing in foreign investment, strengthening the rupee and reversing the country's slowing economic growth.
Government officials told reporters before the Cabinet meeting Thursday evening that the decisions being made were crucial; TV news channels spent the day touting the proposals. In anticipation of the reforms, the benchmark Sensex index breached the 19,000 level for the first time in 15 months and the rupee rose above 52 to the dollar for the first time since April.
In the end, the Cabinet agreed to support raising the limit on foreign investment in insurance and pension funds from 26 to 49 percent, Chidambaram said. Business leaders pushed for the increase to bring in a wave of foreign capital that could help the country increase investment in infrastructure and other needed projects.
The Cabinet also proposed modernizing India's outdated laws governing companies and competition.
The moves come as the government struggles to overcome a growing raft of corruption scandals, policy paralysis and months of bad economic news.