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India Liberalizes Industry, Eyes Privatization

India Liberalizes Industry, Eyes PrivatizationIndia Liberalizes Industry, Eyes Privatization

India promised on Monday to open up the coal industry to private players and moved closer to selling a stake in a state-run oil company, as Prime Minister Narendra Modi picked up the pace on economic reform days after relaxing fuel price controls.

Using an executive order, the cabinet agreed to allow private Indian companies to mine and sell coal at an unspecified future date, Finance Minister Arun Jaitley said. That sets the stage for the biggest liberalization of the industry in more than 40 years, Reuters reported Tuesday.

The ruling party’s success in two state elections last week capped several days of action on the economic front and has given Modi more room to cut through a thicket of regulations.

“Reform is the art of the possible,” Jaitley earlier told TV network ET Now, hinting that more was to come. “In the first year, when people expect lot of reforms and there is lot of popular support behind the reform process, it is more easily possible.

Modi was elected in May on promises he would create jobs and rejuvenate the Indian economy, but investors and economists were disappointed by his first budget and a lack of early progress on fixing structural economic problems.

  Revival

In the last week, he has gone some way towards quelling those concerns, putting in a reform-minded team at the finance ministry that includes prominent economist Arvind Subramanian to help formulate the budget and policy.

The economy is showing some signs of revival and inflation has plummeted, aided largely by a drop in global oil prices.

On Saturday, the cabinet freed diesel pricing of government intervention and raised the price the government pays producers of natural gas by a third to $5.61 per mmBtu.

Modi also began an overhaul of creaky labor rules, cutting the power of labor inspectors and slashing the red tape for small companies that makes India one of the toughest places in the world to do business.

Indian shares, bonds and rupee currency all performed strongly on Monday in response to the new economic policies and the victories by Modi’s Bharatiya Janata Party (BJP) in the states of Maharashtra and Haryana.

Financialtribune.com