Enthused by the over 8.0 per cent growth this year, the finance ministry on Monday expressed confidence India will maintain high growth path logging 8-10 per cent GDP growth in the next two decades.
Aided by abundant skilled labour force, rising savings rate and doubling of insurance business every 4-5 years, India will emerge as one of the fastest growing economies of the world in the next 20 years, Vijay Kelkar, advisor to finance minister, said while inaugurating an international insurance congress.
"Growth is going to accelerate in the coming decade. Last decade, the country's GDP grew by nearly 6.0 per cent annually and next two decades would witness 8-10 per cent annual growth," he said.
According to Central Statistical Organisation, India's GDP is estimated to log 8.1 per cent growth this fiscal.
Although research agencies project a dip in GDP growth next year, Kelkar said the country would move to the higher growth trajectory despite the fluctuations in some years.
In the coming two decades, he said the country would have the highest number of working population coupled with rise in savings rate. With abundance of labour supply and financial capital, he said: "India will be among the fastest growing economies in the world."
To boost long-term savings, he said the finance ministry is committed to adopting fiscal steps to promote insurance sector.
"The insurance industry will double every 4-5 years as economic development takes place," he said.
N S Sisodia, secretary for financial sector, said the insurance sector can aid economic development by ensuring financial stability, rise in savings rate and better allocation of country's capital.
Although the foreign direct investment limit in insurance sector has been capped at 26 per cent, Sisodia said an expert committee headed by N K Singh has recommended hike in the limit to 49 per cent to promote growth in the sector.
He asked the insurers in the developing nations to cooperate by sharing information and business intelligence, R&D and technical assistance to promote insurance market in the developing countries.
India offers large potential, especially in crop insurance, pension and micro-insurance, he said, adding GIC has 'unutilised' funds, which can go into reinsurance of risks in other developing nations.
Health and life-style insurance are the two sectors which would come up in a big way in the years to come, Kelkar said.
The insurance industry can take up the challenge of promoting infrastructure development, he added.
Referring to the ongoing financial sector reforms, he said government has moved away from the defined benefit to a defined contributory pension system and set up a separate Pension Fund Regulatory and Development Authority.
Indian banks will soon adopt the stringent Basle-II norms for asset classification after it has reduced non-performing assets significantly, he said.
India was also the first country to adopt T+2 (transaction date plus two) rolling settlement system and 100 per cent screen-based equities trading system, which has reduced transaction costs significantly.
