The Hindu : 8 p.c. growth target achievable: Jalan

Online edition of India's National Newspaper
Saturday, Dec 28, 2002

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8 p.c. growth target achievable: Jalan

By Our Special Correspondent

BANGALORE DEC. 27. The RBI Governor, Bimal Jalan, on Friday said that India could achieve eight per cent growth target fixed for the Tenth Five Year Plan (2002-07). The conditions were right and the country's current macro-economic situation had seldom been better.

Inaugurating the 24th Bank Economists' Conference (BECON) here, Dr. Jalan dismissed cynicism expressed in certain quarters regarding the growth target and said the country could achieve it without much difficulty.

Despite drought in many States, the inflation rate had been hovering around three per cent in recent weeks. There was no balance of payment problem, foreign exchange reserves were high, and external debt had not increased. Despite border tensions, conflict in Iraq, global recession, increase in oil prices, the economy grew at the rate of 5 to 5.5 per cent of the GDP, he said.

Dr. Jalan said strengthening the prudential norms and market discipline; adoption of international benchmarks; and management of organisational change and consolidation within the financial system; upgradation of technological infrastructure of financial system; and human resource development as the catalyst of information were the essential elements to make the Indian banking system stronger, efficient and low-cost.

"We have made some progress in these areas; yet some concerns persist regarding the peace and quality of progress," he said.

The RBI had proposed to the Centre to set up a regulatory authority for cooperative banks. It was for the Centre to take a decision on setting up of the authority, since the cooperative sector was a State subject consensus was required on the issue.

He said the Credit Information Bureau was expected to launch commercial operations in the first quarter of 2003. The bureau was intended to prune the production costs associated with the supply of financial information for a potential clientele comprising banks, housing finance companies and cooperative banks. The bureau was expected to provide more accurate information and to circumvent the constraint of limited infrastructure of some of the participants in the financial system.

A major drag on the financial sector reforms was the slow progress in the management of NPAs. Although the NPAs had decreased, they were still high by the international standard of about two per cent, he said.

Stating that financial reforms in India were pre-active and pro-active rather than a result of banking crises, he said there was need to improve the quality of service to customers. "No other sector has been affected by advances in technology as much as banking and finance," Dr. Jalan said and added that many banks had introduced ATMs, Internet Banking and any branch banking. Stressing the role of the HRD, he said efforts should be made to use the full potential of employees to achieve a collective goal. Tolerance for no work, low productivity, lack of accountability, high cost and lack of corrective actions on time would reduce the financial viability of the banks, he said. "We spend a lot but gain relatively little," he said.

The Planning Commission Member, N.K. Singh, said the non-interference by the Government in the affairs of the bank would make them more competitive.

He urged the Government to get two important Bills on reduction of Government's equity to 33 per cent in banks and Fiscal Responsibility Bill passed as they were pending in Parliament for the last 18 months. He hoped that the Bills would be passed in the Budget session of Parliament.

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