India to open external sector with caution

Monday, 06 December 2004, 20:30 IST
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NEW DELHI: India will open up its external sector and move towards capital account convertibility to integrate better with the global economy, but with an eye on caution, a top finance ministry official said here Monday. "We are preparing ourselves and continuing to integrate with the rest of the world," Rakesh Mohan, economic affairs secretary in the ministry of finance, told the India Economic Summit here. "The key issue is to keep opening the external sector, but carefully," he told the summit organised by the Davos-based World Economic Forum and co-hosted by the Confederation of Indian Industry. "After the crisis of 1997-98, the question of opening up and speed of global integrating has to be worked out with caution," he said. It was for this reason that India managed to be among a few countries that maintained a great degree of financial stability and did not suffer while pursuing economic reforms since July 1991, he added. Shifting to the financial sector, Mohan said India needed to introduce more competition in the insurance and banking sectors since a similar experience in the telecom sector had resulted in better service and consumer satisfaction. "Another important issue is to introduce innovation in different segments of the financial services market," he said, adding some aspects in this regard would mean innovative products and market-determined interest rates.
Source: IANS