The Indian Budget 1996-97 The Indian Economy Overview


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Corporate Sector

  1. It is widely acknowledged that the Companies Act 1956 needs to be re-written comprehensively. Some work has already been done. I intend to constitute a small drafting team comprising persons with knowledge of law, economics and company affairs to prepare a new draft and make it ready for public debate. My deadline is January 1, 1997.

  2. In the meanwhile, I propose to introduce some urgent amendments to the present Act to provide for the following :

  3. Hon'ble Members will agree with me that these changes are necessary and should be introduced right away. Next year, I shall come back to the House with a new Companies Bill.

  4. In order to achieve competitiveness, Indian industry must be given easy access to improved technology. At present RBI accords automatic approval for technology imports subject to the requirement that royalty will be limited to 5% on domestic sales and 8% on export sales and that the lump sum payment does not exceed Rs.1 crore. All other cases require case- by-case approval by the Central government. Industry has represented that the Rs.1 crore limit for automatic approval needs to be increased. Responding to this demand, it has been decided to increase this limit to $ 2 million (equivalent to about Rs.7 crore). With this liberalisation, a large number of technology import cases will not have to come to government.

  5. The Industrial Reconstruction Bank of India (IRBI) was constituted to function as the principal credit and reconstruction agency. Thanks to rapid changes, the burden of reconstruction is being shared by different stakeholders including development financial institutions and banks. I, therefore, propose to transform the IRBI into a fulfledged, all- purpose development finance institution with headquarters in Calcutta. I will soon bring the necessary changes in the statute governing IRBI.
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