| The suggestion was made by the visiting US Treasury Secretary, John Snow, while addressing industry leaders at a meeting organised by the Federation of Indian Chambers of Commerce and Industry (Ficci), American Chamber of Commerce (AmCham) and the US India Business Council (USIBC). |
| It was apparent that the Dabhol issue was playing in his mind as he urged India to expedite the process of dispute resolution. |
| Snow said India must shed its reluctance to move forward in opening up markets and initiating reforms, especially in the financial sector. |
| "I have observed in my meetings with business and political leaders here that there is scepticism in opening up the sectors to usher in more FDI. The cost of moving gradually will directly impact growth as constraining FDI in financial markets, like options, futures and derivatives, will stall the percolation of benefits to the real sector of the economy," he added. |
| Snow underscored the importance of a well-functioning financial system and said it would energise the rest of the economy by ensuring that savings yielded adequate returns, got converted into investments and made capital available in the short- and long-term for financial intermediation and support for the infrastructure sector. |
| "As the benefits of strong capital markets deepen and encourage capital formation, the prime candidates for further liberalisation will be the intermediate bond market, banking and lifting of the equity caps on the insurance sector," Snow said. |
| On the issue of reforms, Snow said India had to reach out to the people, for which there had to be a political constituency. |
| "The difficulty lies in creating a constituency in the future as the gains from growth can be visualised but not realised in the short run. That creates opposition to reforms because of the displacement and loss of jobs that it entails," he pointed out. |
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