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Infrastructure investment will go up, says Ahluwalia

Investment in infrastructure and other areas will increase in the post-budget era as corrective measures are on to put the country's economy back on track, Union Finance Secretary Montek Singh Ahluwalia said today.

Participating at an interactive session organised by the Greater Mysore Chamber of Industry in Bangalore, he said an indication for a substantial revival was seen during the past few weeks with the disbursement process picking up considerably.

Saying that the slowdown in the industrial growth was only temporary, he said the country's economy, compared to those of the neighbouring countries and the East Asian nations, had withstood the test as its fundamentals were strong. A stable rupee against the dollar was a case in point.

Though the Reserve Bank of India had to intervene on a couple of occasions when the currency had slid down, it had bounced back and remained steady. Moreover, inflation remained low consistently.

Ahluwalia said with the removal of bottlenecks in the power and telecom sectors, the first major power and telecommuncation projects would commence their operations soon. Other projects which were on the pipeline would also progress with the financial disbursements, he added.

He said the government would pay attention to bringing down the fiscal deficit and opening up of the infrastructure sector to give more thrust to the reforms.

The government would have to keep a check on borrowings to further reduce the interest rates. "Unexpected and unusual" spending during the last fiscal, especially on account of the implementationof the Fifth Pay Commission recommendations and slowing down of export, besides the change of government at the Centre, had put pressure on spending, he said.

He said Prime Minister A B Vajpayee had reviewed the situation relating to the financial sector in an attempt to remove all bottlenecks.

Union Finance Minister Yashwant Sinha had already held pre-budget discussions to elicit the views of all sectors especially the industrial sector to ensure continuation of the economic progress, he said.

Earlier in the day, speaking at the inauguration of the Banking Technology Concept Centre in Bangalore, Ahluwalia said the second phase of reforms in the banking sector will be implemented as soon as the government accepts the second report of the Narasimhan Committee submitted recently.

Ahluwalia said the government was studying the report and it would be made public shortly.

On the banking sector's computerisation programme, he said the bank managements had not utilised the flexibility provided by the labour unions in the computerisation programme. The achievement so far was much below what was accepted. If the banks were to take up the challenge of competition, there was need for a revolution in banking technology he added.

Stating that the first phase of banking reforms had considerably improved the prudential norms and supervisory structure, he said reforms were needed to put the banking sector on a sound footing.

Ahluwalia said lack of competition among the Indian banks had acted as an hindrance in the modernisation of the sector. But the situation had changed and the banks should go in for newer technologies instead of replacing manual work with computers.

He said technological changes elsewhere should drive the banking sector to change themselves and cater efficiently to their clients.

Referring to the target concept of the banks and their computerisation programme, he said this had to be given up and the nature of banking experience should change to ensure better and satisfactory services to the customers.

If the country maintained a growth rate of seven to eight per cent, it would have a large number of people living in urban areas and also, the number of urban areas would increase. This would put a tremendous pressure on the banking sector, he pointed out.

The country, instead of looking at the banking sector in the developed nations, should follow the experience of advanced developing countries, he added.

Ahluwalia said the banking services were being bound with various new technologies such as anytime banking, Internet banking, and credit card. The nature of financial intermediation was changing, he added.

The Banking Technology Concept Centre, the first of its kind, has been set up by the Indian software giant Infosys Technologies Ltd, at a cost of Rs 20 million. It depicts the enabling technology that would make future banking operations possible.

It displays the different kinds of branch architecture that were emerging worldwide. It also emphasises self-service banking through multiple-delivery channels such as anytime money, Internet, and telephones.

"The centre is Infosys initiative to assist the banking industry to experience new generation technology being adopted by leading banks in the world," company chairman and managing director M R Narayana Murthy said. The technology exhibited would provide Indian banks the agility required for competing in the networked age and reap the benefits of globalisation.

Leading international solution vendors to the banking sector such as Digital, ICSS, Intel, NCR, Oracle, and Sun Microsystems have joined the Infosys initiative to effectively equip the banking industry for the next millennium.

UNI