According to Kelkar, who had a discussion with the chiefs of financial institutions on Monday, the economy is making a fast recovery. "Cement prices have gone up and the number of applications for housing loans has increased," he said.

The finance secretary said the bullishness in stock markets could be sustained as the "return of the feel good factors" was not an accident. "It has a solid basis. The return of the investors will get further momentum. This is a fallout of the Government's retreat from populism. It (the Government) is taking a series of steps which may not be verylarge but purposeful.

He referred to three instances of "retreat from populism": the Government is willing to reduce subsidies, it is openly talking about privatisation, and it has also made a small beginning in downsizing. "The fact that the Finance Bill was accepted by all political parties even though it has an element of surcharge on income tax and corporate tax shows the convergence of policies," he said.

He added that the 1999 Exim policy had accelarated the process of dismantling quantitative restriction on trade. Kelkar said that important economic legislations like the IRA bill, Fema bill, and amendment to the Securities Contract (Regulation) Act held up due to the current political situation will be cleared after the 13th Lok Sabha is constituted.

Speaking on the occasion, ICICI chairman N Vaghul made a strong pitch for privatisation of the banking sector. "The Government must give up ownership in banks. Banks must be publicly held and run by professional managements," he said.

The ICICIchairman lamented that lack of an adequate and transparent information base on the financial markets, in particular, and economy, in general, was one of the vulnerable points facing the country. "Even the statistics on fiscal deficit and GDP growth lacks credibility. This is exemplified by the swings in the provisional and final figures. This difference is too large for international investors," he said. Stating that the financial sector is "not in fine fettle", Vaghul attacked the concept of "gradualism" in financial-sector reforms and called for speeding up the reform process.

According to Vaghul, though interest rates have by and large been deregulated, there is reluctance to do away with regulation of the savings account deposit rates. "This creates distortions in the financial sector. Why do we need a complex mechanism of lending rates like short-term prime lending rate, medium-term prime rate, and long-term prime rate; why can't we focus on a yield curve?"