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Centre targets airports, satellites, banks

Jan 13, 2000

The central government seems determined to push through the second phase of reforms. In a recent meeting, the cabinet has cleared proposals for giving airports on long-term lease, permitting companies to invest and operate satellites and simplifying the procedures for recovery of debt by banks and financial institutions. The government has cleared a proposal to give the airports in five metros Bombay, Chennai, Delhi, Bangalore and Calcutta on a long-term lease. In view of the fact that the government is unable to provide funds to improve the dilapidated condition of the Indian airports the step is in the right direction. Moreover, keeping in mind India's target of becoming a major tourist destination, an improvement in the infrastructure is a must. Giving the airports on long-term lease will rid the government of a cost centre. The move will also result in the improvement of airport infrastructure.

Another major decision taken by the centre is aimed at permitting companies, with a maximum foreign direct investment of 74%, to own and operate satellites. This sector has been the monopoly of the Indian Space Research Organisation (ISRO). The decision is likely to come as a boon to various telecom, media and Internet companies that have to currently depend of public sector units to carry on their operations. Once private participation is permitted, there is likely to be a rationalisation on the cost front as competition picks up. Moreover, the sector will get a much-needed dose of investment that will help in the overall improvement of satellite and related infrastructure.

The third policy approval relates to measures to simplify the process of debt recovery by banks and financial institutions. The key measures taken in this regard are the attaching of property at the time of filing of complaint, empowering officials handling such cases and faster recovery of loans. These steps are very essential in view of the build up of non-performing assets and a delay in the recovery of the collateral. The present system has created a sense of security that not much action would be taken in case of default. Debt recovery laws need to be strengthened in order to help the banks clear the balance sheets and also reduce its future incidence.

The government's measures are a step in the right direction. They will help in attracting much-needed foreign direct investment (FDI) into the country. While the FDI will help improve the country's infrastructure, the debt recovery laws will help in the creation of a more vibrant financial market.

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