Financial sector reforms high on agenda: FM

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New Delhi, Dec 2 (UNI) Finance Minister P Chidambaram today expressed the determination of the government to complete the unfinished reform agenda, which includes financial sector and capital market reforms.

The financial sector reforms outlined by the Finance Minister included banking and insurance reforms as well as pension sector reforms.

The remarks made by the Finance Minister came during a Question-Answer session at the three-day India Economic Summit, which began here this morning and has been jointly organised by the World Economic forum (WEF) and the CII.

Mr Chidambaram expressed hope that these reforms would see the light of the day during the remaining 16 months tenure of the UPA government.

The remarks came from the Finance Minister in response to a question posed by Founder and Executive Chairman of WEF Klaus Schwab who wanted to know what were the reforms that he would have liked to see which have not taken place.

The session was titled 'The shifting power equation'.

Mr Chidambaram eloquently argued that while China and India were the key contributors to the global economy, economic power has not shifted to these two giants.

Power continues to be vested with the United Kingdom and the United States, who control global finance and knowledge. They have been magnets attracting capital and knowledge from all over the world.

''They have the best universities, the best research institutes, the best minds, and the best scientist and researchers,'' he said.

Mr Chidambaram said that India and China together account for 60 per cent of the global output and argued that the day was not too distant when financial, knowledge and material resources would move towards them. However, for the next decade or so they will continue to be centers of economic power.

The Finance Minister lamented that India was still far off from meeting the Millennium Development Goals (MDG) and in case it does so its GDP too will move up.

Mr Chidambaram said it was incumbent upon the global community to ensure that India and China are able to meet the MDGs.

He was categorical that India will be able to sustain its growth rate of 8-9 per cent for the next decade because of its high savings and investment rate. The present rate of Gross Fixed Capital Formation needs to be stepped up from 35.5 per cent of GDP to 40 per cent of GDP.

Mr Chidambaram expressed dismay that little had been done to improve the delivery systems despite the fact that outlays on social sectors had been substantially hiked. For instance outlay on education has been increased four times and health doubled. ''We are using the same tried and failed systems and we have not tried new models.'' The Finance Minister said garnering resources was not a problem in a growing economy even though implementation was. He regretted that many States have not been able to put up enough bankable projects that the States have bought forth.

Mr Chidambaram said the State governments continue to rely on the Center for devising schemes and no matter what the talk of decentralisation is, the State governments continue to clamour for Centrally Sponsored Schemes.

The Finance Minister felt that the Public Private Partnership mode for the development of the infrastructure was not moving rapidly and one of the reasons was the lack of clarity on the subject.

''The objective of PPP is to use private resources to build public infrastructure and not vice-versa.'' He said so far 12 major infrastructure projects have been outlined under the PPP mode, but was hopeful that the figure would reach half a century in few years time.

He said he had a financing arrangement to draw out such projects and asked the State governments to take advantage of this.

UNI

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