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Rethink financial sector reforms: Karat

Special Correspondent

Cautions government against any move for capital convertibility

Wants Participatory Notes system scrapped
Call to initiate anti-recessionary measures

THIRUVANANTHAPURAM: Asserting that the Indian financial system has remained relatively immune from the global financial crisis only because of the strong resistance offered by the Left so far, CPI(M) general secretary Prakash Karat has urged the UPA Government not to go ahead with further deregulation of the financial system.

Inaugurating a seminar on ‘Global Financial Crisis and India’, organised to mark the silver jubilee of the State Bank of Travancore Staff Union here on Friday,

Mr. Karat hoped that the Parliamentary Standing Committee on Finance would reconsider the three pending bills relating to the banking and insurance sectors and for pension fund reforms in the light of the global financial crisis triggered by the collapse of the financial system in the U.S.

He also cautioned the government against any move to go in for capital convertibility at this juncture terming any such attempt ‘dangerous’. He wanted the government to put an end to the Participatory Notes system and pointed out that the need of the hour was a tightening of the regulatory system.

“It is sad that the government has not learned appropriate lessons from the global crisis and is still talking of going ahead with the financial sector reforms,” the CPI(M) general secretary said.

Speaking on the occasion, noted economist Prabhat Patnaik said the government must immediately initiate anti-recessionary measures to ensure that the global financial crisis did not hurt the ordinary people. It must borrow from the Central bank to augment the purchasing power of the people, protect the peasantry from fall in prices of agricultural prices and take appropriate trade policy measures to prevent import of unemployment into the country, he said.

The implications of the current financial crisis has been muted in the Indian economy only because of the intervention by the Left when it was supporting the UPA Government and its stiff opposition to the government’s moves for capital account convertibility, Prof. Patnaik added.

Kerala Finance Minister T. M. Thomas Isaac also spoke.

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