Montek for further opening up of financial sector

Ahead of the Budget, Planning Commission Deputy Chairman Montek Singh Ahluwalia today said the country should further liberalise its financial sector to play a bigger role on the global landscape.

"Even when the industrialised countries appear to be shrinking, we may well be expanding the scope of liberalisation of the financial sector," he said while addressing a session at the 40th annual meeting of the World Economic Forum (WEF) here today.

"We have to persuade our population and educate them about the advantages of expediting financial sector liberalisation," he added.

Ahluwalia's statement comes at a time when the Finance Minister is working out the parameters of his 2010-11 budget which, besides tax proposals, will also include a statement laying down the economic reforms programme of the government.

The important pending financial sector reforms include raising the foreign direct investment cap in the insurance sector. The agenda of the government also includes reforms of the pension sector.

In case of the banking sector, the pending reforms include providing greater operational freedom to foreign banks and raising voting rights of overseas entities in private sector banks.

Following the collapse of Lehman Brothers that triggered the global financial meltdown in October 2008, many developed countries have turned cautious and some even adopting protectionist steps to safeguard their economies.