Finance minister P. Chidambaram (right) with Parmeshwar Godrej at the India Economic Summit in New Delhi on Sunday. Picture by Ramakant Kushwaha

New Delhi, Dec. 2: India will go ahead with reforms in the banking, insurance and pension sectors. It will also look at bringing about changes in the functioning of the capital markets.

Speaking at the India Economic Summit here today, finance minister P. Chidambaram said: “Financial sector reforms are lagging behind. We need to push through financial sector reforms in banking, insurance and pension and the unfinished agenda in the capital markets.

“But I still think that we have 16 months and we might be able to make some progress,” he said.

The three-day meet is being organised by the World Economic Forum.

By 16 months, Chidambaram was alluding to the time left for the Congress-led government to complete its five-year tenure.

The government has been trying to push through reforms in the banking, insurance and pension sectors but has been stymied by opposition from the Left parties, which are supporting it from the outside. However, officials said a parliamentary committee had cleared limited pension reforms and this left the door open for a forward movement in other segments of the financial sector.

At the meet, the finance minister spoke of the importance of inclusive growth. “What we have managed to say is ‘don’t debunk growth’. Growth is imperative. But likewise, we also say growth does not mean it is for the top 10 per cent of India.”

He said: “Achieving a growth of over 8 per cent and repeating it for the fifth year would make any government proud. But we have brought the country into discussing inclusive growth.”

The government is funding programmes to guarantee jobs to the rural youth. It is trying to empower the weaker sections with welfare, education, housing and entrepreneurial assistance. India, which grew at about 8.6 per cent annually over the past four years, can sustain its high growth rate for another two decades as its investment to income ratio is at 35 per cent and expected to rise to 40 per cent.

However, for growth to move to a higher trajectory, it is necessary to push through fresh financial sector reforms.

“It’s these financial services that drive the world economy today. As long as the advanced economies control financial resources, they will always have an advantage over the developing countries,” Chidambaram told the gathering that had many captains of industry in attendance.

The finance minister said India and China would continue to drive global expansion. The world’s two fastest growing economies are more “nimble” and can produce at a lower cost, he said.