Govt. aiming at double digit GDP growth in medium term: Pranab Mukherjee

NEW DELHI - Union Finance Minister Pranab Mukherjee on Friday said the government is aiming at a double digit Gross Domestic Product (GDP) growth in the medium term, and added that there is already an upturn in investment and private consumption demand, revival of merchandise exports and buoyancy in capital flows, which can support this growth.

Addressing the dignitaries, senior officials, staff and customers of Canara Bank on Founders’ Day Celebration of Canara Bank here today, Mukherjee said: “The Government has set the target for private and public sector investment in infrastructure to the tune of US1 trillion dollars for the next Five Year Plan. Banks as financial intermediaries have an important role to play in India’s growth story.”

“As requirements for infrastructure investment picks up, banks will have to prudentially manage asset liability mismatches. Banks also need to make use of innovative credit enhancement mechanism and take out financing for bridging gap between demand and supply of long-term funds,” he added.

Pranab Mukherjee further said that financial inclusion, which is core to the government’s policy agenda, is carried forward in a cost effective manner.

” Government is in favour of cost effective technology solutions, implicit and explicit incentives and commitment to increase financial penetration of affordable banking services particularly in the rural and unorganized sectors,” said Mukherjee expressing delight about the progress made by public sector banks in terms of increasing their penetration and outreach in under banked and unbanked areas.

“Banks have formulated their Financial Inclusion Plans for 73,000 habitations in the country with population of more than 2000 and these are being monitored at the Central and the State level,” he added.

The Finance Minister said with a view to strengthen and institutionalize the mechanism for maintaining financial stability and to address certain regulatory concerns in the Financial sector, the government has decided to set up an apex-level Financial Stability and Development Council (FSDC).

“The Government has also decided to set-up a financial Sector Legislative Reforms Commission (FSLRC) to rewrite and clean up the financial sector laws and bring them in the line with the requirements of the sector,” he said.

Mukherjee said though the on-going reforms should help further strengthen and stabilise the financial sector, the emerging challenges before banks cannot be overlooked.

” Care should be taken to ensure that there is no further deterioration of the asset quality as reflected by the increase in the proportion of doubtful and loss assets in the NPA portfolio of banks in 2009-10. Banks at the same time should meet the additional provisioning norms to provide a cushion against asset slippages while maintaining profitability,” he added. (ANI)