Days after the Union Budget 2012-13 announcement,a financial sector committee met to discuss the macro-economic situation and the impact of the Budget. The sub-committee of the Financial Services Development Council (FSDC),in its meeting on Monday,also discussed the global economic scenario and its impact on India. The euro zone crisis,high oil prices and domestic conditions have already slowed down growth to 6.9 per cent in the current fiscal and GDP growth is expected at below 8 per cent even next fiscal. The meeting discussed the potential challenges to growth and possible solutions, an official said. Significantly,the sub-committee,which is headed by RBI governor D Subbarao,also discussed a proposal for setting up an inter-regulatory forum for improved co-operation for effective supervision of financial conglomerates. In case of another global financial crisis,such financial conglomerates pose one of the biggest threats to the economy, the official pointed out. This issue was also highlighted by the Economic Survey 2011-12 last week. Inter-linkages between insurance and banking sectors are a matter of concern,with many insurance companies being part of financial conglomerates. Efforts,therefore,have to be made towards building firewalls to prevent contagion from one sector to another,especially in times of stress, it said. Apart from Subbarao,the meeting was attended by Sebi chief UK Sinha,Insurance Regulatory and Development Authority of India (Irda) chairman J Harinarayan and secretary,department of financial services,DK Mittal. RBI deputy governors KC Chakrabarty,Subir Gokarn,Anand Sinha and HR Khan were also present.
