FM bets big on financial services

Sector will rise to $48bn by 2015

India has said its growth story, steered mainly by IT and telecom so far, will shift gear towards financial services to drive expansion. "It is our intention to make financial services the next growth engine for India," finance minister P. Chidambaram said at ICICI Securities Investor Conference here on Friday.

As the economy becomes more open and trade intensity increases big financial flows would be intermediated in India, he said. Pointing out that India is a purchaser of international financial services, he said there is an opportunity for India to become a provider of these services as well.

He cited a recent report to state that these services were valued at $13 billion a year and would rise to $48 billion by 2015. A government constituted committee earlier this year had submitted its recommendations on making Mumbai an international financial centre. "It is, therefore, our intention to make Mumbai an international financial centre," he said, adding the report is in public domain and the process of building a consensus on the key recommendations is on.

Pointing out that the outlook for the Indian economy is positive, Mr Chidambaram said the factors driving the current growth are domestic consumption, rise in investment, increase in employment and increase in productivity of both labour and capital. "I do not foresee any change for the worse in these factors. While there are some risks such as crude oil prices and commodity prices, we are confident that we would be able to manage these risks without hurting the process of growth," he said.