India will not slow down on financial sector reforms despite the global financial crisis,

RELATED ARTICLES RBI likely sold dollars at 56-level: traders RBI does not rule out selling dollars to oil companies RBI should intervene to check rupee slide: Anand Sharma Direct RBI dollar sales to oil firms possible: Rangarajan RBI to infuse Rs 12k cr into market this week

Reserve Bank of India governor D Subbarao said here on Tuesday. “It is mistaken thinking, we are not slowing down on reforms, we are only recalibrating the road for reforms,” said the governor at a function in Mumbai.

Reiterating that reforms were very much on the government’s agenda, Raghuram Rajan, economic advisor to the prime minister said it may just be taking longer than otherwise desired. “Reforms are coming up but not at a pace that we may have liked it to. Various proposals are being taken up, and discussions are on… Conservatism is not always the best way forward, when there is growth in the economy, it also leaves room for taking a few risks, which in the long term may be useful for the economy”, he added.

Rajan also mooted development of a corporate debt market where there was widespread participation from pension funds, insurance companies and also household income, rather than concentrate on banks, which are the large investors in bonds.

“We need a deep and wider range of investors so that it is more secure as the risk will be more widespread. We need to get out the secure household savings,” said Rajan.

India escaped the crisis because 70 per cent of the banking assets are in the public sector, said Rajan. “India was far from the epicentre of the crisis as real estate lending is relatively small in India,” he added.

He, however, said that RBI should distance itself more from the government to preserve credibility and shed responsibility for managing government debt, and have a clearer focus on inflation. ‘In fact, there should be a separate agency for managing government debt. If the government borrowing is too large, RBI may be forced to carry a lot of government debt on its books,” Rajan said.