said the country has taken small but significant steps in the recent past. “Add all these together, and we will see we have traveled quite a distance. There’s no case at all to downgrade India,” he said. The minister explained to the investor community about last week's freeing of diesel price from government control that could eliminate oil subsidy entirely in two years, opening up retail and aviation businesses to greater foreign ownership, setting up a cabinet panel to clear pending major investment projects and easing of rules on foreign borrowing for select businesses.
Chidambaram also told investors about last month's relaxation in foreign borrowing limit for both the government and businesses. In December, foreign investment limit in government securities and corporate bonds were raised by $5 billion each, extending the overall foreign institutional investment limit in Indian bonds to $75 billion. The ceiling for government securities were raised with no residual maturity constraint. Besides easing the liquidity crunch, the move is expected to help rupee appreciate and help in bridging current account deficit.
The finance minister told a news agency that it was universally acknowledged that the country has handled the GAAR situation fairly effectively and buried the “ghost of GAAR.” The rules introduced at the beginning of the fiscal to check aggressive tax avoidance was diluted last week. GAAR will now come into force from April 1, 2016 as against the original schedule of April 1, 2014. Chidambaram held the changes made to the rules were fair, just and non-discriminatory.