So far, asset management companies had to launch a new closed-end ELSS every year to provide tax-breaks to investors. The existing species of ELSS has a duration of 10 years with repurchase facility after three years.

``It is a step in the right direction and in line with the series of measures aimed at reviving the markets,'' said P S Subramanyam, chairman, Unit Trust of India. ``Now, these schemes will be available throughout the year to investors,'' he added.

Subramanyam pointed out that UTI would approach the Securities and Exchange Board of Indiato make necessary changes in the draft prospectus of Master Equity Plan '99 in order to make it open-end. ``We are waiting for the details from the government and proceed accordingly,'' he said. Whether mutual funds will be able to launch open-end equity-linked saving schemes in the current fiscal will depend on the notification from the government. ``This requires minor procedural changes and was hanging fire for quite some time. It should now be promptly carried out so that open-end tax savers are launched in fiscal 1999,'' said an analyst.

If the government order comes into effect from the current fiscal, many funds are likely to make an attempt to launch these tax saving plans. So far, only UTI and Kothari Pioneer have filed their draft prospectuses with Sebi for ELSS while Birla AMC is expected to announce shortly its plans for an ELSS this year. Kothari Pioneer, for one, has made final arrangements for the launch of KP Taxshield '99. ``It all depends on the notification and we will proceedaccordingly,'' said an official with the mutual fund.

While the announcement to make ELSS open-end has finally come through, the mutual fund industry wants the government to extend tax concessions under ELSS to all open-end growth funds. ``Like tax breaks under 54EA and EB in income funds, the government should extend benefits under section 88 of the IT Act to existing open-end growth funds,'' said an official with a private-sector AMC.

ELSS were launched in 1992 to encourage participation from middle class investors in the equity market. Under this scheme, investments upto Rs 10,000 are entitled for tax rebate of 20 per cent of the investment made. For instance, if tax liability of an investor is Rs 3000 and he invests Rs 5000 in an ELSS, 20 per cent of Rs 5000 or Rs 1000 would be reduced from his tax liability, thus bringing it down to Rs 2000.

However, the lack lustre performance from these schemes has resulted in investors turning away from these instruments. The net asset value has even gone belowpar in some cases. While falling markets is one reason, over a longer time frame of 3-5 years, returns from these funds have not even matched those of indices. For instance, in the past five years, the average return of tax plans has been down 6.66 per cent while the BSE Sensex has fallen by 2.76 per cent on an annualised basis.