The shifting of the Foreign Investment Promotion Board to the finance ministry is a portent of a major foreign direct investment announcement in the Budget.

Top government sources said the Big Two -- Prime Minister Atal Bihari Vajpayee and Deputy Prime Minister LK Advani -- decided at a meeting on January 27 that FIPB should be handled by Finance Minister Jaswant Singh rather than by the industries and commerce ministry.

There has been no convincing explanation on why the shift was effected.

These sources say, the move is, partly, a measure of the finance minister's ambition.

But the fact that several recommendations in the NK Singh report on FDI created a huge outcry in the Cabinet when the report was first submitted, made Vajpayee and Advani alive to the fact that political handling by a leader of seniority and authority was required even if just a few of the recommendations were to be implemented.

Jaswant Singh was seen as the only leader senior enough to carry Cabinet with him on some of these decisions.

FDI in retail, for instance has been opposed tooth and nail by the BJP.

However, the reality is that if consumer spending is to be one of the channels through which the Indian economy is to be revitalised, there is no option but to allow retail chains like WalMart to come to India.

But because the opposition within the Sangh Parivar will jump at the Bharatiya Janata Party's throat if this decision is implemented, to begin with the finance ministry is likely to pursue FDI in other relatively non-controversial areas that fall within its own purview.

This means making efforts to attract FDI in banking and insurance.

At present foreign investment in the insurance business -- through the FDI, FII or NRI route -- is capped at 26 per cent. Foreign insurers are keen on raising the stake to at least 50 per cent, if not more.

Although this will mean an amendment to the Insurance Act, 1938 through Parliament, Singh is seen as the only politician who will be able to carry this through.

Industry believes Indian players might not be able bring in the funds needed to meet the prescribed solvency ratios prescribed by IRDA, something that is restricting expansion.

In the case of the banking sector (private sector banks) some international players are operating in India by setting up branches as opposed to banking companies.

They believe it will be worth their while to set up a company only if the government permits a higher holding against the present stipulation of 49 per cent. Some smaller private sector banks have high price-to-earning ratios and low non-performing assets.

They are viewed as plum offerings for takeovers by foreign banks, in some cases, with the potential of quadrupling their market capitalisation.

FIPB has aroused the covetous instincts of successive finance ministries ever since it was set up.

In the Narasimha Rao era, it was controlled by the Prime Minister's Office and was used as an instrument of influence-building. During its first term in office, the national Democratic Alliance government clubbed together commerce and industry and placed FIPB as a part of this ministry.

But now, with an assertive finance minister, an ambition has been realised.

As foreign minister, Jaswant Singh had proposed redrawing ministerial boundaries, at one stage also proposing that the World Trade Organisation be brought under the ministry of external affairs.

That proposal had to be abandoned when then Commerce Minister Murasoli Maran staked his career and his ministry on this - he threatened to resign if FIPB was moved out of his ministry and went underground in Chennai, causing both the prime minister and the foreign minister to make frantic calls to let him know that his jurisdiction would not be curtailed.

Now, in order to justify the FIPB move to the finance ministry, the finance minister will have to make some major announcements. Although they might come sooner than expected, it is likely that the Budget will be one way of unveiling them.