India needs to speed up reforms in its financial sector if it wants to maintain its high economic growth rates over the next two decades, the country's finance minister said Sunday, according to AP. India's economy has averaged 8.6 percent annual growth in the past four years, helped by a surge in investments by both domestic and foreign companies. The economy is expected to grow by nearly 9 percent this year. Some experts fear that momentum could be lost, however, if the government does not move fast to reform the banking industry, allow more competition in the insurance business and get the private sector to participate in pension funds. India's economic liberalization program, which began in the early 1990s, has slowed in recent years because of opposition from communist parties _ whose parliamentary support is crucial for the present government's survival. «The financial sector is the heart of the economy. We have not been able to push forward those reforms,» Finance Minister P. Chidambaram said at a New Delhi meeting of business executives hosted by the Geneva-based World Economic Forum. Chidambaram said he believes long-term strong growth could be a reality if India does carry out the reforms. «I can see this growth continuing for the next 10, 15, 20 years,» he said. «We have to keep investment going.» Chidambaram said he sees India's investment rate _ the ratio of total investments to the country's economic output _ increasing from 35 percent now to 40 percent over the next five years. Higher savings among prospering Indians and increased capital flows from overseas have helped India's investment rate rise sharply in recent years.
