Allow foreign investors in insurance firms: Plan Comm

The government favours raising foreign investment in the insurance sector to 49 percent from the current 26 percent, but that has been strongly resisted by communist allies on the grounds it will involve major job losses.

The ability of state-run banks to raise capital for growth would be severly constrained unless government holdings were allowed to fall below 51 percent, the report added.

“It would therefore be appropriate to consider evolution of a path towards reduction of government ownership in a manner that minimises dislocation or dissonance among various stakeholders,” the report said.

Again under pressure from left allies, the ruling Congress party-led coalition has ruled this out.

The report said liberalisation of the economy has been uneven, with reforms in the real sector outpacing those in the financial sector.

It added there has been limited consolidation in the banking system and there was a need to push the concept among mid-sized state-run banks, which are duplicating investments in technology and other infrastructure.

The high-level panel selected six sub-sectors of the services sector: information technology and IT enabled services, tourism, shipping, health services, financial services and retail trading.

“The group felt that action on three fronts was critical for enhancing the competitiveness of the services sector,” the report said.

“The education system must be reformed and expanded, the skill deficit in most service sectors must be eliminated through concerted action and the physical infrastructure, including urban infrastructure and civic amenities, brought to world standards.”