Adb Calls For Deregulation Of Financial Sector

The Asian Development Bank (ADB), in its 30th annual meeting, has called for deregulation of the Indian financial sector. The meeting was attended by the Union finance minister P Chidambaram and also the top brass of IDBI, UTI, SBI, ICICI, IFCI and Exim Bank.

While discussing the economic scenario in the emerging markets of Asia, the need for free financial markets was stressed. Speakers said the financial markets should be self-contained and not regulated by the government.

A "compartmentalised" financial environment only helps the foreign players who have earlier gone through a similar process in other countries, the speakers said. If proper markets are created, then Indian players will prosper, it was observed.

 

Taking examples from the Japanese finance ministry, which is committed to deregulate the banking sector over a period of five years, the speakers said "such a model should be adopted by other emerging market countries as well".

The Indian government, as well as other governments of South Asian countries, were urged to decontrol the system and stop interfering in the financial markets system.

The conference highlighted the need of substantial savings by the government (in countries like India, savings has been converted into consumption rather than becoming investments), educating the masses and investing in public health, allowing private sector growth in as many areas of operation. The speakers stressed the need for production on an export-oriented manner and clear government policies besides good governance.

During the three-day conference which concluded on May 13, ADB president Mitsuo Sato said: "In order to support dynamic progress in the developing nations, huge investments and a substantial additional flow of capital continue to be necessary to finance physical and social infrastructure in the region."

The speakers emphasised the increased importance of ADB's catalytic and leveraging role in facilitating such a flow of funds, noting the significant role to be played by the private sector in the development process.