Inflation a major challenge, says Pranab
Union Finance Minister Pranab Mukherjee on Saturday said that the major challenge for the Government in the short-term is inflation.
“Inflationary pressures persist both from higher global commodity prices and domestic structural demand-supply imbalances in several commodities,” said Mr. Mukherjee while addressing the 64th annual general meeting of the Indian Banks' Association (IBA) here
The wholesale price index (WPI) is at 8.66 per cent annually in April 2011, much above the targets of the Reserve Bank of India (RBI).
“The other concern is to sustain our growth momentum in the medium to long term, which requires pursuing a path of fiscal prudence along with implementation of reforms that remain, including in the financial sector,” Mr. Mukherjee said.
While talking on the banking industry, Mr. Mukherjee said that “There is one area where I am a little concerned. It is the issue of asset quality.”
During 2010-11, non-performing assets (both gross and net) have increased as against the level in the previous year. “It is important for banks to constantly monitor and bring down the NPA to the previous level”.
Financial inclusion is a key determinant of sustainable and inclusive growth, which in turn is essential for building an equitable society. “We have accorded high importance to financial inclusion to cover the entire gamut of financial services pertaining to savings, credit, insurance and transfers. A major on-going, task in this context is to promote greater financial literacy and investor protection,” he added.
The Government has set up two funds with NABARD, namely Financial Inclusion Fund (FIF) for meeting the cost of developmental and promotional interventions of financial inclusion and Financial Inclusion Technology Fund (FITF) for meeting the cost of technology adoption. As on March 31, 2010, 50,255 villages were covered under financial inclusion through FIF and FITF.
One of the key areas in the banking sector, where banks have to give proper attention is human resources, said Mr. Mukherjee. Getting people with adequate skill and knowledge is the need of the hour. As banking becomes more sophisticated, there is a need for improving the skill set of the employees of banks. The Government has set up a committee to look into the HR issues of state-owned banks with a view to improving the HR policies. He said that the Indian Banks' Association has finalised a scheme for common recruitment of personnel for nationalised banks. Mr. Mukherjee also said that with the cooperation of Indian Banks' Association the Government had launched a Central Electronic Registry earlier this year for recording mortgages. It would help check frauds of multiple borrowing against the same property and help in the growth of the market and the banking industry.
Keywords: inflation, price rise, Pranab Mukherjee
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