Set to push reforms in financial sector: PM

“We are working towards a gradual yet steady progress in the financial sector. We are also better placed than any time in the recent past to push the reform process forward,” Singh said inaugurating the 25th edition of the India Economic Summit in Delhi. “Some of the reforms needed,especially in insurance,involve legislative changes. We will strive to build the political consensus needed for these legislative actions to be completed.”

Addressing global CEOs and domestic industry leaders,the Prime Minister also said the government would take steps in 2010-11 to gradually withdraw the stimulus imparted to the Indian economy. “We will take appropriate action next year to wind this down,” he said. Finance Minister Pranab Mukherjee has already said in past that the government will let the stimulus run its full course this fiscal and start unwinding only the next fiscal.

Having spelt out the criteria for disinvesting government stake in public sector enterprises last week,it was time to focus on developing a long-term debt market,improving futures markets for better price discovery and regulation,and ensuring finance for infrastructure development,Singh said.

“All these issues will be addressed through gradual but steady progress in financial sector reforms. This will make the sector more competitive while ensuring an efficient regulatory and oversight system,” he said. He also reiterated the government’s commitment to simplify rules and procedures for foreign direct investment (FDI) norms and to encourage portfolio investments by qualified institutional buyers (QIBs). Expressing optimism over the country’s growth prospects in the coming years,Singh said India had managed the downturn much better than many other nations. Even though he projected a somewhat lower growth rate for 2009-10 at 6.5 per cent with monsoons playing truant,he said the economy could clock a 7 per cent plus growth rate in 2010-11 subject to normal rainfall. “There are clear signs of an upturn in the economy. With a normal monsoon next year,we hope to achieve a growth rate of over 7 per cent,” he said.

Singh said health and education remained the two areas closest to his vision of reform and inclusive growth. He said India has to spend as much as 6 per cent of GDP on education reforms and skill development. “The plan is to scale up expenditure on health also from the current 1.2 per cent of GDP to 2-2.5 per cent,” he said.

The Prime Minister outlined the need for the world to make a serious commitment to climate change,with the developed nations taking on the responsibility for not only providing finances but also developing clean technologies and making them accessible to developing countries at affordable prices.

“Historically,accumulation of carbon dioxide is not because of what we have done but is a result of 150 years of industrialization of the major developed countries of the world. We hope that they will contribute more capital flows towards mitigation and adaptation,” he said in response to a query made by Klaus Schwab,founder and executive chairman World Economic Forum.