Finance minister Pranab Mukherjee said on Friday he was concerned about the fast-growing microfinance sector but wanted to regulate it, not strangle it.
?I am afraid that the views expressed by and concerns of a large number of people are genuine and I am equally concerned,? Mukherjee said when asked about growing concerns regarding the sector, which has seen little regulation. The microfinance sector has been reeling since Andhra Pradesh clamped down last month on industry collection practices. He also said the Centre will soon set up a Financial Legislation Reforms Commission, which will be mandated with the task of updating financial laws in the country, Mukherjee said.
To resolve the overlapping of regulations, the commission will be mandated with the task of updating the financial laws in the country, in order to avoid instances like public spat between Irda and Sebi in the case of Ulips.
The proposal to set up this commission was stated in the last Budget. The finance ministry is working towards sorting out areas of conflict between the regulators over financial products. In a similar move, the ministry is setting up the Financial Stability Development Council. Satisfied with the economic growth momentum, the finance minister cautioned that if the high economic performance does not help the poor of the society it is defying the national goal. Emphasising on the financial inclusion, Mukherjee stressed on the greater role banks should play in reaching out to the masses.?We cannot remain satisfied with this growth (8.5% expected this fiscal). We shall have to cross the barrier of double-digit growth,? Mukherjee told during a Canara Bank function.
Optimistic with 8.8% growth registered in the first quarter of this fiscal, Mukherjee said he would stick to projection of 8.5%, even if IMF has made a higher projection of 9.7% for this fiscal. Slow development of infrastructure projects being one of the main barrier in achieving double digit growth, Mukherjee said there would be an estimated gap of 30% for the one trillion dollar investment pegged for infrastructure during the 12th Five Year Plan (2012-17). ?We have to breach that gap,? the finance minister said.
He said even though IMF has projected Indian economy to grow by over 9.7% this year, he would stick to the growth projection of 8.5% this fiscal. IMF uses a slightly different methodology for calculating gross domestic product (GDP) by including Indirect taxes, while the government measures the economic growth excluding indirect taxes.
Besides, IMF measures the growth for the calendar year, which the government calculates it for the fiscal year. The country?s economic growth bounced back to 8.8% for the first quarter of this fiscal after shrinking considerably following the impact of the global economic crisis in 2008.