"We can have 8 per cent growth. The question is how to create a financial sector which can foster 8 per cent growth," Finance Minister P Chidambaram said at a conference organised by IRADe-IIEF in New Delhi.
Stressing on better risk management, he said, "With insurance and derivatives, risks are controlled, which increases the viability of projects and foster higher investment rate. This in turn leads to higher GDP growth."
Referring to the Common Minimum Programme, he said there was a need to strengthen the financial sector regulators and run it professionally to foster competition.
Observing that the Securities Exchange Board of India and Insurance and Regulatory Development Authority have brought about tremendous energy in the financial sector, he said, "Pension Fund Regulatory and Development Authority will be set up within a few weeks. With SEBI and IRDA, the PFRDA will more or less complete the financial architecture."
Chidambaram said most of the earlier reforms had been carried out on a "trial and error" basis. "I will ask SEBI, IRDA and PFRDA to adopt the best practices."
Commenting on the suggestion that the country could have a super regulator like Financial Services Authority of UK, Chidambaram said India was perhaps too vast a country to have a single regulator but it was necessary to strengthen the existing regulators and ensure that they work together.
On banking sector reforms, Chidambaram said a roadmap would be unveiled within a few days. "We lost some time (7-10 days) because of the Tsunami."
Chidambaram had earlier said that the roadmap for banking reforms, including hike in FDI in private banks from 49 to 74 per cent, would be announced by December end.
The UPA would stand by the notification issued by the NDA government on March 5 to enable FDI in private banks to go up to 74 per cent, he had said.
The government is also considering a proposal to hike the voting rights of foreign players from the present 10 per cent. The Finance Minister also asked the financial sector to emulate the software and manufacturing sectors and become world powers.
He told financial sector intermediaries to come up with suggestions on how to improve the financial sector architecture, strengthen regulations and foster competition to emerge as global players.
"If I have a choice of answers, may be I would answer them on February 28 (budget day)," he said, indicating that the government was eager to take measures for speeding up financial sectors reforms.