FM slams opponents of financial sector reforms

Written by Agencies | Bangalore, December 29: | Updated: Dec 30 2007, 01:11am hrs
Finance Minister P Chidambaram asked opponents of reforms, who also want high growth, to come to terms with changes - which alone can deliver over nine per cent growth.

"I am sometimes surprised that people who desire nine per cent plus (GDP) growth have no desire to make any changes in the structure of the banking sector, pension sector and the insurance sector," he said at a function organised by Canara Bank here.

The UPA government, which has just about 15 months in power, is keen to push ahead with financial sector reforms.

These reforms relate to hiking FDI limit from 26 per cent to 49 per cent in insurance sector, giving statutory powers to interim pension regulator and hiking voting rights of foreign players in private banks.

"If these sectors remain undeveloped, backward, remain rigid, remain completely out of the demands of the modern economy, how can India's economy grow at nine per cent or more", he asked.

Chidambaram said if India is to grow at nine per cent-plus continuously, it has to modernise its financial sector.

Chidambaram noted that the GDP grew at 9.4 per cent last year and that "we have potential to grow at 10 per cent or even more."

He said banks only provide small part of financing for high growth of GDP and added that other elements or players of the financial sector such as insurance, pensions and provident funds had to share the burden of financing.

The growth of every player in the financial sector has to be commensurate with that of GDP, Chidambaram underscored.