New Delhi, December 5
Finance Minister P. Chidambaram today rolled out red carpet for foreign investors targetting FDI worth $ 150 billion “in every sector of the Indian economy,” appointed Mr Ratan Tata, Chairman of the Tata Group, as the head of the three-member Investment Commission, and hinted at major reforms in the financial sector in the coming months.
The measures include a detailed roadmap for hiking FDI limit to 74 per cent in Indian private banks, a Pension Regulator and an amendment to the Insurance Regulatory (Development) Authority Bill.
The Investment Commission will serve as the interface for potential and actual investors in the country and “would speak on behalf of the government.” The objective is to create a place, where “businessmen will be happy to deal with businessmen,” Mr Chidambaram told top representatives of the global industry in the India Economic Summit organised jointly by the World Economic Forum and the Confederation of Indian Industry (CII) here.
Other members of the Investment Commission are eminent banker and Chairman of HDFC, Deepak Parekh and Chairman of Board of Directors of I-One Source, Mr Ashok Ganguly. The notification to this effect is expected to be announced tomorrow.
The Investment Commission will engage world business leaders, “will serve as the government’s face and will be the government’s voice. They will listen you, identify the problems” and suggest solutions, he said.
Defining the broad contours of India’s development paradigm, Mr Chidambaram said a detailed roadmap for the banking sector would be ready “before the month ends” and the proposed pension regulator would be in place by the end of the year.
The roadmap would define
the parameters for allowing foreign banks to pick up 74 per cent equity in Indian private banks.
Significantly, the erstwhile NDA government had notified in March this that FDI in private banks would be allowed up to 74 per cent.
“Foreign banks can acquire up to 74 per cent in Indian private banks. But there is no roadmap on this. We will unveil the roadmap,” he said.
“But I can tell you, the public sector banks will give you a run for your money,” Mr Chidambaram remarked at the meet attended by leading bankers, global CEOs, top bureaucrats and the intelligentsia.
It may be recalled that Mr Chidambaram had set the ball rolling for a consolidation exercise in the banking sector by dropping more than subtle hints in recent months.
The insurance industry, which has been forcefully advocating the cause for infusion of more funds, is being presently discussed within the government and hopefully, a Bill should be introduced by early next year, he said.
“There is a discussion going on in the government and a bill (to amend the IRDA Act for hiking FDI cap in insurance) will be introduced early next year,” he said. The Finance Minister had proposed a hike in FDI cap in the insurance sector from 26 to 49, despite stringent opposition from some political quarters.
The Finance Minister said the pension fund regulator would also be in place by the end of this year and the new pension system would be open for every subscriber.
In a clear case of policy prioritisation, the Finance Minister said the infrastructure was most critical area where huge injection of funds was required.
While in telecom, the total fund requirement was to the extent of $ 40 billion, more than $ 12 billion were required on an annualised basis for sustained period of 10 to 15 years in the cash-starved power sector.
