The Core Group on Economic Affairs, headed by the cabinet secretary and consisting of the secretaries of finance, revenue, defence, commerce and industry, met here today to look at measures that would offset the negative investment sentiment subsequent to the imposition of sanctions by the US and the G-8. The Group took an in-principle decision to place some key projects in the infrastructure sector on the "fast track" -- for affirmative and demonstrative action by the government in clearing the bottlenecks which have come to plague these projects. The finance ministry today also decided to push for the adoption of the rolling settlement system in Indian stock exchanges despite opposition from Sebi and some of the major stock exchanges in the country. This is being bandied as a valiant attempt by the ministry to curb excessivespeculation in the markets. The proposal will be adopted at the next board meeting of Sebi.The Sebi board is slated to meet on Tuesday to review the market scenario and take necessary corrective action.

In an unprecedented move, the Planning Commission has circulated a note suggesting further reforms to the infrastructure sector for consideration of the Cabinet Committee on Infrastructure (CCI). The note specifies further reforms in highways, ports, inland waterways and civil aviation. Well- placed sources said that the deputy chairman of the Planning Commission, Jaswant Singh, has been directed by Prime Minister AB Vajpayee to give the necessary thrust to the reforms process in the economy in the face of dithering by the concerned administrative ministries.

Normally, it is the administrative ministry which is supposed to move proposals with regard to policy decisions in sectors which come under their ambit. But in this case, the Planning Commission seems to have set the agenda by seeking in-principlesanction from the CCI and then allowing the administrative ministries to fill in the details. Sources said the Planning Commission may start playing a key role in jump-starting the stalled reforms process from now onwards. While the views of the administrative ministries will be taken into consideration the Commission will seek to push through a reforms agenda at the highest quarters -- at the level of the the Union cabinet and the two other cabinet committees (of infrastructure and economic affairs).

The cabinet secretary-chaired Core Group on Economic Affairs today took cognisance of the adverse impact on investor sentiments of the sanctions imposed on India in the aftermath of the Bomb and the turmoil in the stock and foreign currency markets.

While this group felt that the sanctions would not hurt the economy immediately, there was a consensus that project-specific, instead of sector-specific, action is required to buoy sentiments. The group will identify projects in telecom, power, highways,petroleum, mining and civil aviation sectors where red tape can be cut and pending government sacntions and policy initiatives can be provided immediately.

Snags in the way of providing counter-guarantees for the pending power projects are expected to cleared shortly. Some concessions are also expected from the government on this front. Policy initiatives and sops on specific highway and civil aviation projects (including the Tata-SIA proposal) will also taken up by the Core Group for appraisal.

Cabinet sanction will be sought wherever necessary with a view to clearing hurdles. Meanwhile, Sebi will be pressured by the ministry to accept the rolling settlement system, but the onus of working the modalities (whether it will be T+3, or T+5, etc.) will be left to the regulatory authority to formalise in discussions with the stock exchanges.

The ministry is of the view that the highly speculative positions in the markets and the resultant payment crises are a result of the weekly settlement system.

Thespeculative positions, the ministry argues, lead to a price differential of as much as 20 per cent in individual scrips in the NSE and BSE on the same day. Though trading volumes may shrink and banks may not be able to adjust payouts over shorter timeframes, the advantages of the rolling settlement system will outweigh the disadvantages in the long run, the ministry has argued.

Fighting off the sanctions blues