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India could emerge as the most vibrant economy, says Jalan

Our Correspondent in Hyderabad

"India has the capacity and capability to emerge as the most vibrant economy of the 21st century, if it can put its act together," the Reserve Bank of India governor Bimal Jain has said.

Making his remarks at the two-day meet of the India Finance Forum-2000 which opened here on Friday, Jalan said that the government, RBI, and the private and public sectors have to work together to achieve this goal. He noted that in spite of several national and international problems in the last decade, India has shown the capacity to grow and achieve an economic growth rate of 6 to 6.5 per cent.

The country has witnessed many changes in the field of banking and finance. The domestic savings have reached 26 per cent of the gross national product and the forex reserves of the country have scaled a new peak. Tremendous opportunities existed in the area of foreign direct investments.

The RBI governor said that the country has made substantial progress in various sectors in the last ten years but it needed to tackle several problems. Interest rates structure, he said, should be made more flexible in response to the monetary policy changes. He emphasised the need for development of a private debt market in the country since only a government securities market exists today.

Referring to the agenda for India for the next ten or 15 years, he said that this agenda of reforms cannot be fulfilled unless the different segments of policy making apparatus come together. "We must evolve a banking system which provides transparency, accounting and accountability of international standards," he pleaded.

Stating that the government was an extremely important player as the owner and manager of major financial institutions, he said that in a world which was expanding and diversifying, the role of the RBI also required to undergo a change. He emphasised the need for more private sector institutions in the financial sector since much of the growth in this sector would have to come from private enterprise in the coming years.

He, however, quoted a recent survey wherein only 15 per cent of the respondents felt that their money was safe in the private sector bank. People did not want to put their money in the non-banking finance companies. There was also tremendous disenchantment with asset management by the private sector. Thus, these issues needed to be tackled, he said.

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