The financial sector, in India, is worried with the exit of P Chidambaram from the finance ministry. With no full time finance minister, banks and insurance companies among others fear that decision making may be more time consuming even as Prime Minister Manmohan Singh has brought the portfolio under him.
A senior official at a public sector bank said that the prime minister would be required to devote his time and energy towards other pressing issues, including foreign affairs in the wake of the terror attacks. “The financial sector is facing a tough challenge and a full time finance minister is crucial, though the prime minister understands the subject more than anybody else,” the official said. Banking industry experts added that there needs to be a strict vigilance and full time co-ordination between various regulatory bodies, authorities and the government to avoid any major impact on the financial sector.
A sources in the government , however, also pointed out that the exit of Chidambaram would signify a new phase in the financial sector in the midst of the global meltdown as the former finance minister was unable to bring in several reform measures during his tenure of over four years. “That apart, it is easy now to reverse certain proposed measures announced earlier as it may be difficult to carry them out now and the change of guard would is a face saver,” he added.
Chidambaram has been stressing the need for public sector banks to merge to form bigger and stronger entities. Despite his repeated appeal, no action has been taken on this. In addition, other reform measures in sectors like pension and insurance have also remained unfulfilled due to pressure from the Left parties—UPA’s erstwhile allies. The collapse of the global financial sector, however, has brought much embarrassment to the UPA, which underlined the need to go ahead with the reform measures.