• Delicensing of coal and lignite, petroleum (other than crude) and its distillation products and bulk drugs.
• Delicensing of sugar.
• Dereservation of coal and lignite and mineral oils.
• Companies were permited to buy-back their own shares subject to restriction of buy-back to twenty five per cent of paid-up capital and free reserves.
• A National Task Force on Information Technology and Software Development submitted a 108 point Action Plan in July 1998. The recommendations have been accepted by the Government and directions for their implementation have been given to all concerned departments.
• Patent bill approved by Rajya Sabha and subsequently promulgated through an Ordinance.
• A number of items, including some farm implements and tools, have been removed from products reserved for exclusive manufacture by SSI sector.

Infrastructure

Trade Policy

• The April 1998 Exim policy delicenced 340 items of import by moving them from the restricted list to OGL.
• India unilaterally removed all quantitative restrictions on imports of around 2300 items from SAARC countries with effect from August 1, 1998.
• A Free Trade Agreement was concluded on 28 December, 1998 between India and Sri Lanka which will result in zero import tariffs for most commodities on both sides by 2007.
• Payment of interest on dues to exporters for delays in duty drawback/refund of duty beyond two months.
• The scope of Export Promotion Capital Goods scheme at zero duty has been extended further to certain specified bio-technologies and small scale engineering industry.
• Extension of tax holiday for EOU/EPZ to 10 years.
• Permission to set up Private Software Technology Parks (STPs) for export.

Foreign Direct Investment

• Projects for electricity generation, transmission and distribution and construction and maintainance of roads, highways, vehicular tunnels and vehicular bridges, ports and harbours have been permitted foreign equity participation up to 100 per cent under automatic route. The automatic route is subject to a ceiling of Rs. 1500 crore on foreign equity.
• FDI permissible under Non-banking Financial Services now includes "Credit Card Business" and "Money Changing Business".
• Multilateral financial institutions have been allowed to contribute equity to the extent of shortfall in NRI holdings within the overall permissible limit of 40 per cent in private sector banks.
• FDI up to 49 per cent equity has been allowed subject to license, in the companies providing Global Mobile Personal Communication by Satellite (GMPCS) services.
• Unlisted companies are permitted to float Euro issues under certain conditions.
• End-use restrictions on GDR/ADR issue proceeds have been removed except those on investment in stock markets and real estate.
• Indian companies permitted to issue GDRs/ADRs in the case of Bonus or Rights issue of shares, or on genuine business reorganisations duly approved by the High Court.

Foreign Institutional Investors

• FIIs permitted to buy or sell treasury bills and government securities in both primary and secondary markets within overall approved debt ceilings.
• Authorised Dealers have been permitted to provide forward cover to FIIs in respect of their incremental equity investment in India.
• Transactions among FIIs with respect to Indian stocks will no longer require post facto confirmation from the RBI.
• 100 percent FII debt funds have been permitted to invest in unlisted debt securities of Indian companies.

External Commercial Borrowing

• Proceeds of ECB can now be deployed for project related rupee expenditure in all sectors subject to certain conditions.
• The Government has delegated ECB approvals to RBI up to US$ 10 million under all the ECB schemes.
• ECB eligibility under the scheme for exporters has been raised to three times the average export performance during the last three years subject to a maximum of US$ 100 million.
• Average maturity requirement for ECB under the long term maturity window which is outside the ECB cap has been reduced.
• Domestic rupee denominated structured obligations have been permitted to be credit-enhanced by international banks/international financial institutions/joint venture partners.
• Prepayment of ECB by Indian corporates has been allowed if this is met out of inflow of foreign equity.

Financial Sector

• Prudential regulations for banks tightened to require provisioning for Central and State Government securities, Government guranteed loans, and general provision for standard assets.
• Risk weight of 2.5 per cent for market risk of government securities, 20 per cent for state government guaranteed advances in default and 100 per cent for foreign exchange open position.
• Minimum Capital to Risk-weighted Asset Ratio (CRAR) for banks to rise to nine per cent by April 2000.
• Assets in the substandard category to be classified as doubtful after 18 months instead of 24 months, by March 31, 2001.
• Regulatory framework for NBFCs rationalised Companies which solicit public deposits to comply with revised norms. Number of companies whose shares must be traded in de-materialised form increased. Rolling settlement introduced for de-materialised shares.
• Conditions for public issue by infrastructure companies eased.
• Primary issues to be compulsorily through depository mode.
• 100 per cent book building permitted for issues above 25 crore.
• Bill for strong independent Insurace Regulatory Authority, and opening of Insurance and Pension funds to private companies introduced in Parliament; proposed to allow 26 per cent foreign equity and additional 14 per cent NRI and FII holding.
• Bill introduced in Parliament for amending the Securities Contracts (Regulation) Act, 1956 so as to widen the definition of "Securities" to cover derivative contracts.
• New bill for Foreign Exchange Management, to replace FERA, introduced in Parliament.

Taxation

• All the gifts made on or after 1.10.98 exempted from payment of gift tax by Finance (No.2) Act, 1998.
• Tax holiday increased from 5 to 10 years to industrial undertakings set up in the free trade zones and units in the software technology parks.
• Tax holiday benefits extended to inland waterways, inland ports, radio-paging, trunking and EDI Network and domestic satellite service.
• Administrative measures to improve reporting and widening the tax base include: (i) introduction of a simple one page taxpayer-friendly return form called, ‘SARAL’, applicable to all non-corporate tax payers; (ii) making it obligatory for assesses to quote their PAN or GIR number in respect of certain high value transactions; (iii) the presumptive taxation scheme, introduced in 1997-98 budget in 12 cities ,extended to 23 more cities in India taking the total coverage to 35 cities and two additional economic criteria added; and (iv) introduction of a new scheme called "KAR VIVAD SAMADHAN SCHEME" to recover the money locked in litigation both in direct and indirect taxes.
• Reduction in import duty on 75 specified machinery from 25 per cent to 15 per cent to encourage investment in the information technology sector.
• Reduction in basic import duty to a level of 5 per cent ad valorem on many items related to information technology.
• A number of items which were earlier exempted from excise duty, would now attract nominal duty of 8 percent.
• Excise duty on a number of products, which were attracting a low rate of duty raised by 5 percentage points.
• The coverage of service tax was widened to cover 12 more services.
• The GDP growth rate, which decelerated significantly to 5.0 per cent in 1997-98 from 7.8 per cent in 1996-97, recovered to an estimated growth of 5.8 per cent in 1998-99.
• The recovery in 1998-99 was led by the rebound in ‘agriculture and allied sectors’, which is projected to grow by 5.3 per cent.
• Total gross domestic savings declined to 23.1 per cent of GDP in 1997-98 from 24.4 per cent of GDP in 1996-97.
• Real Gross Domestic Capital Formation dropped marginally from 26 per cent of GDP (constant price) in 1996-97 to 25.6 per cent of GDP in 1997-98.
• The 1998-99 food grain output is expected to be about 195.3 million tonnes.
• As measured by the Index of Industrial Production (IIP) industrial growth rate for April-December 1998 was 3.5 per cent, down from 6.7 per cent for April-December 1997.
• While the basic goods sector decelerated from 6.8 per cent growth in April-December 1997 to 1.4 per cent in April-December 1998, the 9.8 per cent growth rate in capital goods sector for April-December 1998 was significantly higher than the growth of 6.7 per cent in the corresponding period of 1997.
• The import of capital goods (machine tools, mechanical and electrical machinery, transport equipment and project goods) in US $ value also increased substantially during April-November 1998. The growth rate of 7 per cent represents a large turn around from the 16.6 per cent fall in the corresponding period of 1997-98.
• Infrastructure performance during April-December 1998 has declined as compared to the corresponding period of 1997.
• The annual rate of inflation in the WPI rose during 1998-99 to a peak of 8.8 per cent on September 26. It decelerated thereafter to 4.6 per cent (provisional) on January 30, 1999.
• Despite the steep, though temporary, flare up in the overall inflation rate during 1998-99, the underlying inflation rate remained modest.
• The year-on-year monetary (M3) growth at 19.8 per cent as of January 15, 1999 exceeded the corresponding growth in 1997-98 by 2.9 percentage points.
• The total flow of funds comprising non-food credit and investment in debt/equity instruments expanded by 9.7 per cent till January 15, 1999 as against 11.5 per cent in the corresponding period of 1997-98.
• The Central Government finances during the current year continue to be under stress.
• There has been slow but steady improvement in the performance of public sector banks.
• Sanctions and Disbursements by All India Financial Institutions continued their strong growth in 1998-99. During April-December 1998 Sanctions grew by 36.9 per cent and Disbursements grew by 12.5 per cent.
• Capital markets remained subdued during most of the year. The bulk of the capital raised (nearly eighty per cent) was in the form of bonds, with very little inthe form of equity issues.
• The current account deficit widened to 1.6 per cent of GDP or U.S.$ 6.5 billion in 1997-98. In 1998-99, it is estimated to fall, as a per cent of GDP, below the level in 1997-98.
• The trade deficit, on a BOP basis, increased from 3.7 per cent of GDP in 1996-97 to 3.9 per cent in 1997-98. The increase of 15.7 per cent in non-POL imports over the same period is mainly a result of a shift in imports of gold and silver from baggage channel to the DGCI&S channel.
• Total imports, on BOP basis, increased by only 4.4 per cent to US$ 51.1 billion in 1997-98 compared to 12.1 per cent growth in 1996-97. There has been a further deceleration of imports in the current financial year.
• The capital account in the balance of payments, which had shown an impressive surplus of U.S. $ 10.4 billion in 1997-98, is likely to be lower in 1998-99.Total net capital inflows in 1998-99 are expected to be substantially lower than the levels in 1997-98, if the exceptional inflows off $4.2 billion under Resurgent India Bonds (RIBs) are excluded. Foreign direct investment (FDI), which had increased by 18.6 per cent in 1997-98, has fallen by 38 per cent in April-December 1998. Portfolio investment has continued to decline from U.S. $ 3.3 billion in 1996-97 to U.S. $ 1.8 billion in 1997-98, to an outflow of $ 0.7 billion in April-December 1998. The significant decline in portfolio investment was partly a result of contagion from the East Asian crisis that affected all emerging markets.
• Gross disbursements during April-September 1998 was lower at US $ 830 million compared to US $ 1066 million during the corresponding period of 1997. External Commercial Borrowing (ECB) approvals up to 23.12.98 in 1998-99 have been placed at US $ 3.8 billion compared to U.S. $ 8.7 billion in 1997-98. Disbursements have fallen even more sharply from $ 4 billion in April-September 1997-98 to US $ 1.6 billion in the first half of 1998-99. This is due to the relative unattractiveness of ECB from the perspective of borrowers.
• Total foreign exchange reserves (including gold and SDRs) at the end of January 1999 amounted to U.S. $ 30.4 billion, which provides cover for about 7 months of imports in 1998-99.
• The exchange rate of the Rupee vis-à-vis the U.S. dollar was Rs. 42.50. The movements in the exchange rate have helped to largely correct the relative appreciation of the Rupee in real terms.
• India’s stock of external debt at end-September 1998 stood at U.S. $ 95.2 billion as against U.S. $ 93.9 billion at end-March 1998. The debt service payments, as a ratio of current receipts, continued to improve over the years declining from 30.2 per cent in 1991-92 to 19.5 per cent in 1997-98. The share of short-term debt to total debt declined from 7.2 per cent at end-March 1997 to 5.4 per cent at end-arch 1998 and further to 3.7 per cent at end-September 1998. The share of concessional debt has declined from 44.7 per cent in 1996 to 39.3 per cent at end-March 1998 and further to 37.7 per cent at the end of September 1998.
• Several anti-poverty measures have been in operation for decades focussing on the poor as the target group. As a ratio to GDP at market prices these expenditures increased to a record high of 1.91 per cent in 1998-99 (BE) as compared to 1.33 per cent in 1991-92 and 1.75 per cent in 1997-98 (RE).
• Large scale industrialisation, spread of transport, communication and other modern infrastructure combined with the pressure of population growth have added to the difficulties of preserving clean environment and healthy natural resource base. These have been exerting pressure on environment as witnessed in growing evidence of air and water pollution and land degradation.
• Such degradation imposes a cost on the society, with the burden of such costs being disproportionately high for the poor who live and depend on such natural ecological systems.
• The most intractable and long-standing issue confronting us is that of the fiscal prudence. Fiscal consolidation is absolutely necessary for containing inflation, reducing interest rates, promoting investment and growth, and fostering reasonable stability in the financial system and the foreign exchange market
• In a broader qualitative sense, sustainability also depends on the quality of the government expenditure and the nature of the tax system underpinning the fiscal system. The low priority expenditures and non-targeted subsidies need to be identified and eliminated.
• The task of reforming the tax system must also be carried forward and completed. But such reforms must be accompanied by determined efforts to augument revenue mobilization through base broadening, improved administration and other means. The decline in the tax to GDP ratio of recent years must be reversed.
• The increased opportunity in the area of software and other service exports and knowledge-based industries has thrown up additional areas for policy reform and procedural simplification.
• The primary responsibility for social sectors, agriculture and rural development is generally assigned to the States under the Constitution, underlines the importance of state level reforms.
• These reforms have to be designed to set in motion a process of self-sustained, employment promoting growth. Democratic participation and empowerment of the people through education, public health improvement and information/knowledge is an essential element of such growth.
• The growth and development are ultimately about the entitlements of people. Universal literacy and compulsory primary education are necessary not only for sustaining productive employment and economic growth, but also for making every individual a full participant in the democratic life of the nation.