FM meets financial sector regulators for Budget inputs

Finance Minister Pranab Mukherjee today discussed the economic situation with financial sector regulators, including the Reserve Bank of India governor and Securities and Exchange Board of India (Sebi) chief, and sought inputs for the 2011-12 Budget, which will be unveiled on February 28.

This was the second meeting of the high-level Financial Stability and Development Council (FSDC) within a month. The first meeting was held on December 31, 2010.

“The RBI policy is scheduled on January 25. As a standard practice, I have come to review the macroeconomic situation with the finance minister,” RBI Governor D Subbarao told reporters after the meeting.

The central bank is scheduled to hold the quarterly review of its monetary policy later this month, in which it is widely expected to raise the key rates by 25-50 basis points to tame inflation, which shot up to 8.43 per cent in December, from 7.48 a month ago.

Besides Subbarao and officials of the finance ministry, Sebi Chairman C B Bhave, Insurance Regulatory and Development Authority (Irda) Chairman J Hari Narayan and Pension Fund Regulatory and Development Authority (PFRDA) chairman Yogesh Agarwal attended the meeting.

Mukherjee, sources said, also sought inputs of the regulators on the Budget with a view to improving and strengthening the financial sector and pushing the economy on the double-digit growth path.

The proposal to set up FSDC to resolve inter-regulatory issues was mooted by Mukherjee in his Budget speech last year. The high-level body is expected to deal with issues concerning financial stability, financial sector development, financial literacy, financial inclusion and macro-prudential supervision of the economy, including the functioning of large financial conglomerates.

Besides, the council will also coordinate the country’s international interface with financial sector bodies like the Financial Action Task Force and the Financial Stability Board.