Chidambaram continues slew of reforms, cuts tax on foreign borrowings

Continuing the slew of reforms initiated by the UPA government, finance minister P Chidambaram on Friday cut the withholding tax on overseas borrowings to 5 per cent from 20 per cent and approved the Rajiv Gandhi Equity Scheme to attract more investment and suppress demand for gold.
"The Rajiv Gandhi Equity Savings Scheme will encourage more first time retail investors to invest in stock market. Secondly the easing of tax is to encourage overseas borrowing. Interest rates are low abroad and these low cost funds can come to India," Chidambaram told reporters here. The stock market responded positively to the announcement with the BSE sensex closing 404 points higher at 18,752.83. These decisions, which aim at improving sentiments in stock market, come within days of government taking tough measures like raising diesel prices by over Rs 5 a litre and allowing foreign direct investment in multi-brand retail. -->