With various financial sector bills pending in Parliament, the US on Monday said India should further liberalise this area to sustain 8-9 per cent growth it was recording before being impacted by global economic crisis. "You have been growing pre-crisis at 8-9 per cent. It seems it could be achievable that you sustain a growth over a period of time. It is going to require more reforms in the financial sector," said US Treasury Secretary Timothy Geithner.
Indian economic growth declined to 6.7 per cent during 2008-09, compared to average of 8.7 per cent in the preceding five years as the economy came under the spell of global financial crisis.
After the government provided stimulus to the economy through tax cuts and increased public spending, the growth accelerated to 7.4 per cent during 2009-10. Despite partial roll back of stimulus, the growth further gathered pace and stood at 8.8 per cent during the first quarter of this fiscal.
The government expects Indian economy to record 8.5 per cent growth this fiscal. Financial sector is considered a next engine of growth. Many financial sector reforms bills like those relating to pension sector, hiking FDI cap in insurance and increasing voting rights of foreign entities in private sector banks are pending before Parliament.
At a CII seminar in New Delhi, Geithner also said reforms in infrastructure sector are needed to speed up growth in India.
Earlier in the day, Finance Minister Pranab Mukherjee said infrastructure areas like electricity, railway, road, ports, airports, irrigation, urban and rural water supply and sanitation suffered from a substantial capacity deficit.
He said foreign investment contribution to infrastructure finance should increase from the 8-10 per cent level. To a query over role of Indians in the US economy, especially after Nikki Haley of Indian origin became governor of South Carolina, Geithner said, "Indian talent is playing increasing role in our economy and we like more of that."
He said US economy is recovering, but it is not fast enough to bring down the unemployment rate. For the third consecutive month, unemployment rate remained unchanged at around 10 per cent in October.
