ARJIMAND HUSSAIN TALIB

New Delhi, Oct 26: Downplaying the rationale for counter guarantee by the Union government for externally-funded development projects in Jammu and Kashmir, Union Finance Minister Pranab Mukherjee today said that for those seeking to cover investment risks in Jammu & Kashmir, “insurance instruments could be a viable option.”
“I do not see the need for counter guarantee by the Union government in a system where the license Raj no more exists”, Pranab Mukherjee said, replying to a question by Greater Kashmir at the Annual Economic Editors’ Conference here today on the inability of J&K state in getting counter guarantees from the Union government for externally-funded development projects.
“There are insurance instruments available. Then there is a level playing field available, and in case of Jammu & Kashmir the situation has to be conducive enough to attract investment”, he added. However, he chose not to make a distinction between private investment mechanism and funding being raised for state-owned development projects.
Asked further on how does his government see the unsustainable and rising disproportion in the funding of the J&K’s plan by the state and the Centre, Pranab Mukherjee said that the already established norm of “90 per cent grants and 10 per cent loans” would continue to govern the relationship.
On another question by Greater Kashmir about his government’s strategy of employment generation in J&K in the private sector and facilitating a hassle free investment environment in view of the government’s limitations in providing jobs in the government sector, Mukherjee said “since the Prime Minister had already taken an initiative in that regard”, he expects “job creation will happen in due course of time.”
“I also believe that Kashmiri youth are very talented and they have excelled in jobs in the private sector wherever they have gone. I think they should explore jobs all over India”, he added.
Asking private sector undertakings to set up their units in the state, the Finance Minister said if they have fears about the turmoil that can be taken care of by the insurance coverage.
"So far as public sector firms are concerned they are entitled to establish the units, we are encouraging them, we are encouraging the private sector if they have apprehension because of the turmoil that could be taken care by the insurance coverage," he said.
Mukherjee said government is offering loans at concessional rates for setting up units in Jammu and Kashmir under the special category.
Earlier, the Finance Minister during his inaugural speech exuded confidence that the country’s economy would “shortly revert to nine per cent growth rate” but identified rising prices as a major concern even as he pointed out that inflation had declined to 8.6 per cent from double digits in June.
“It is reasonable to expect that the economy will go back to robust growth path of around 9 per cent average that it was before the global crisis slowed it down”, Mukherjee said.
He also said the gross tax revenues had so far grown by 27.3 per cent while the total revenue receipt had increased by 85 per cent as compared to negative (-) 2.7 per cent last year, mainly on account of the bonanza from telecom spectrum auctions and robust growth in excise and customs duty receipts of 43 per cent and 60 per cent respectively.
He also attributed inflation mainly to rising food prices, adding that “in terms of consumer price indices (retail prices), inflation in the three major groups - industrial workers, agricultural labour and rural labour - have come down to single digit level.”
“There has been a revival in investment and private consumption demand, though the recovery is yet to attain the pre-2008 momentum. Favorable market conditions with improvement in capital flows and business sentiments are also encouraging”, Mukherjee said.

Lastupdate on : Tue, 26 Oct 2010 21:30:00 Makkah time
Lastupdate on : Tue, 26 Oct 2010 18:30:00 GMT
Lastupdate on : Wed, 27 Oct 2010 00:00:00 IST