'Indian banks too risk-averse to serve people properly'

Written by Economy Bureau | New Delhi | Updated: Feb 22 2009, 05:38am hrs
Indian public sector banks may have managed to steer clear of the worst effects of the global financial crisis so far, but thats largely because they have been too small and too risk-averse to serve people properly, Lord Meghnad Desai said in the Capital on Saturday, calling for denationalisation of banks to help unleash Indias true growth potential.

The Indian elitists have let the Indian masses down. For the first forty years, we had very low growth. And since 1991, growth has been rapid, but not rapid enough. There is a need to denationalise banks, reform labour laws and improve nationalised delivery of public services like health and education, which is set to collapse, said Desai, Emeritus Professor at London School of Economics.

He was speaking at a panel discussion on India's Public Sector: What Mission Now organised by the National Council for Applied Economic Research and the Nehru Memorial Library and Museum.

India still has a perception that only the state can be trusted to decide the best public good, a notion that was prevalent in Britain till the 1950s. What we need is a change in psychology to enable citizens to demand what they want. There is a lot India can learn from Britains experience, where public sector reform has now moved from de-nationalisation of companies to privatizing citizen services like passports with mandated performance standards, he added.

Shankar Acharya, member of the governing board, ICRIER, pointed to the problems in health and education services delivery in the existing setup.

Uddesh Kohli, chairman of Consultancy Development Centre, mooted transferring the ownership of public sector units to citizen-administered boards. The panelists arrived at a consensus on the need for the government to give up ownership of public sector companies and divert taxpayers resources to more important expenditures like infrastructure development.