India's financial sector priorities to remain unchanged: PM

 
Against the backdrop of the battle against the sovereign debt crisis in the Eurozone, PM Manmohan Singh has said there will be no change in India's financial sector priorities to sustain high rates of economic growth.
 

"Financial inclusion, provision of long-term funding instruments for infrastructure, the development of liquid bond markets to improve monetary policy transmission, among others, were financial sector priorities in India before the crisis," Singh said in his intervention at the Summit of world's leading 20 economies at Cannes on November 03.

"Nothing has happened in Indian financial markets or globally that warrants changing these priorities. We need to be sure that the regulatory reforms being introduced globally will not hamper this process," he added.

India's concerns were different, Singh said, adding, "the banking capital needs to be strengthened in India, this is not on account of higher risks but because credit is projected to expand at a very fast pace to feed the high real growth that we expect".

Pointing out that tax payers and equity holders in case of the Indian PSU banking sector are the same, he said, "In this environment it is difficult to see why a financial sector tax, which would only raise the cost of capital even further, would be appropriate."

As regards the Indian economy, Singh said, "our economy has slowed down in the current year and GDP growth is likely to be between 7.6 and 8 per cent...We in India are taking steps to ensure a return to high growth.

"We hope to go back to higher growth in 2012-13, together with a moderation in inflation", he added.

"Our medium term strategy focuses on a revival of investment especially in infrastructure, and continuing efforts to reduce our fiscal deficit through improved revenue collection which is expected to come from tax reforms," Singh said.

The Prime Minister also warned that "prolonged" uncertainty and instability in Europe will hurt other countries too and suggested that the IMF can help rescue the situation.

Observing that everyone has a stake in the orderly functioning and prosperity of Europe, including the Eurozone countries, Singh said, "prolonged uncertainty and instability in the Eurozone countries can hurt us all. In an increasingly integrated world, all of us have a stake in the orderly functioning and prosperity of Europe." 

G-20 leaders mulling boost in IMF funding: Britain
World leaders meeting at the G20 summit on Thursday discussed boosting their funding of the International Monetary Fund to help resolve the eurozone debt crisis, Britain's finance minister said.
George Osborne said countries such as the China were interested in the proposals, which have been pushed heavily by British Prime Minister David Cameron, but he refused to put a figure on the increase.
"The international community has also accepted that it needs to address the general global economic situation and there is a debate that has begun, but not concluded, about increasing resources to the IMF," Osborne told reporters.
"There are certainly no numbers yet and I suspect that those discussions will not conclude until tomorrow," he said, summarising day one of the G20 summit in the southern French resort of Cannes.
Britain's government has been floating the idea of an increase in funding for the IMF partly as a way of helping the eurozone without contributing to a direct bailout, which would be politically damaging at home.
Asked if there was international support at the meetings, Osborne said it had been under discussion by G20 nations since the start of October.
"I've not heard anyone object to the suggestion that we increase the resources of the IMF. Individual contributions to that increase have yet to be discussed so I can't give you a number," he said.
"But certainly from what I've heard of the Chinese, and I've had my own discussions with the Chinese here as well, they too are intersted in providing support to the IMF." Cameron said earlier Thursday that Britain would consider boosting its 29 billion (34 billion euros, USD 46 billion) funding for the IMF.