The UPA government has brought little cheer to the financial sector. Pending reforms in the financial sector including pension, insurance and banking are set to be thrown in the backburner. Sources said that with Lok Sabha polls slated to take place in the next year, the UPA government is all set to slow down its reform process in a bid to keep the Left parties satisfied.
It is learnt that even the consolidation process in the banking sector which got going with the boards of the State Bank of India and State Bank of Saurashtra approving the proposed merger move would not be pushed further.
The Union Cabinet which was supposed to take up the issue in the month of January-February is yet to approve the proposal. ?There has been huge protest on the merger issue and the government may go slow on it,? a banking industry source said.
What became a cause for concern for India Inc was the fact that finance minister P Chidambaram did not mention much about these proposed reform measures in his budget speech.
The Pension Fund Regulatory and Development Authority Bill is pending in Parliament despite the approval of the Standing Committee on Finance. The Group of Ministers, which is studying the proposed amendments in the insurance sector has not even submitted its report, bringing more uncertainty to the issue of foreign direct investment limit, which is capped at 26%. Similarly, the banking industry has little hope left on the issue of voting rights. Earlier, the government had proposed to align the voting rights of foreign stakeholders with their shareholding pattern. However, the government has failed to sort out any of these issues.