Skip to main content

Indian Finance Minister Palaniappan Chidambaram attends a session at the annual meeting of the World Economic Forum (WEF) in Davos January 22, 2014.

DENIS BALIBOUSE/REUTERS

India is aiming to issue a new generation of small, private banking licences before spring elections, but will continue to keep the sector largely in Indian hands, its finance minister says.

In an interview at the World Economic Forum, Palaniappan Chidambaram said he would like to see a round of licences issued to increase momentum for financial sector reform.

India's banking sector is often seen abroad as a reason for slower economic growth than that generated by its Asian peers. Mr. Chidambaram defended the cautious approach to banking reform, promoting financial stability over all-out growth. "That's one reason not one bank collapsed during the financial crisis," he said on the sidelines of the global conference.

Story continues below advertisement

Canada's big banks have largely steered away from India, out of frustration over restrictions on foreign banks.

Mr. Chidambaram said more licences, including looser restrictions on foreign investment in the sector, could come after the election. His Congress Party faces a tough fight with the Hindu nationalist Bharatiya Janata Party, which is generally seen as more pro-business.

The finance minister said despite growing international complaints about the investment climate in India, he does not detect a slowdown in interest. He cited pharmaceuticals and telecom as two sectors generating significant overseas interest.

"We are witnessing a slowdown in our growth rate but tell me one county in the world that is not witnessing a slowdown," he said, defending his economic record.

Facing serious fiscal deficits and a steep drop in the rupee last year, his government has pledged to cut fuel subsidies. However, it recently announced a major increase in food subsidies, which may be a vote winner in rural areas but will increase the central deficit.

"How can we apply textbook economics and say, 'Let people die of hunger, that you produce food but it would not be available to its people'?" he exclaimed.

About 45 per cent of Indians receive some form of subsidized food, he said. The expanded program will raise that to about 67 per cent of the population, and cost an additional $4-billion a year.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies