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May 1, 2001
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Money > Reuters > Report May 1, 2001 |
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Yashwant Sinha says Enron row overdone, sees solutionUnion Finance Minister Yashwant Sinha said on Monday a row over a $2.9-billion power investment by Enron Corp. was overblown and would not dampen foreign investor sentiment in the country. "I think too much is being made of this. It is an individual problem between Enron and the government of Maharashtra...I think that it will be possible to settle it to the satisfaction of both parties," Sinha said in an interview on the sidelines of the International Monetary Fund-World Bank spring meetings. "There is no need for us to think that because there is a problem with Enron it is necessarily going to act as a dampener to foreign direct investment," he told a news conference earlier on Monday. Houston-based Enron, the largest single foreign investor in India, took a major step last week toward bailing out of the almost complete power project in Maharashtra in a bitter dispute over pricing and unpaid bills. Analysts say the dispute threatens to undermine already weak foreign private investor confidence in direct investments in India, which totaled just $2.6 billion last year -- a fraction of China's $40.8 billion. But Sinha said the central government had intervened to help resolve the dispute. Budget to foster growth The minister added that he was confident that his recently approved, reform-focused budget would boost both foreign and domestic investor confidence and spur economic growth. "We have listed out a very large number of steps in this year's budget for boosting growth of the Indian economy...primarily the idea is to be able to boost demand in order to be able to create the necessary climate for investment," Sinha said. Sinha has said he is not satisfied with his country's economic growth rate, which is expected to slow to 6 per cent in 2000-01 from the previous year's 6.4 per cent. And he said further cuts in interest rates by the Reserve Bank of India were key to spurring growth. "I sent out a very loud and clear signal in the budget that Indian interest rates should fall in tandem with world interest rates," he said. "As far as the government is concerned, we will try to do our best to ensure that we create the necessary conditions for further reductions in interest rates," he added. Sinha said he did not expect lower rates to put downward pressure on the rupee currency, which is trying to regain its composure after its recent stumble to a record low of 47.10 to the US dollar. "The rupee has been fairly stable except for a few days recently and I do not see any great volatility taking place in the foreign exchange market," he said. Removal of US sanctions would help "I don't share the view that the rupee is going to hit 50 in the next few days. This is a doomsday scenario that has been talked about for the last few years and it hasn't happened yet," Sinha told the news conference. Another boost to foreign investor confidence would be the lifting of economic sanctions imposed by the United States after India's 1998 nuclear tests. Sinha said he had discussed the sanctions with US treasury secretary Paul O'Neill during bilateral meetings on the sidelines of the IMF and World Bank meetings. "I did tell him that things were quite normal, except in certain areas and it will be, I think, in the interests of both countries if the US administration proceeds to approve the lifting of the sanctions," Sinha told the news conference. YOU MAY ALSO WANT TO SEE:
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