Department of Public Administration and HRM, Kakatiya University, Warangal.
The global financial meltdown has left India largely unaffected. There is universal acknowledgement that this is due to the strong presence of public sector in the Indian banking and insurance industries. The world realized at great peril that finance capital is fundamentally in search of quick profits and hence speculative in character rather than having any enduring links with the industry. Therefore, efforts are being made to tame the finance capital and as a result many of the financial institutions including insurance companies have been taken over by the governments in the developed countries. Therefore, India must remain cautious. The plans to further liberalise the insurance industry must be given up. Today, there is a conflict between the IRDA and SEBI over ULIPs and between RBI and SEBI over interest futures. The government must take steps to settle these conflicts and strengthen the regulatory mechanism for the orderly growth of the financial sector, insurance included. However, some measures being taken by the government are raising apprehensions. There is a talk of allowing insurance companies to trade in derivatives. The Union Budget for 2010–11 has proposed to allow new private banks. This raises a genuine question are we going to find ourselves in a situation that was existing immediately after independence? This was the period when every business house had owned a bank and an insurance company. The result was disastrous. India and its people cannot afford to allow such a disaster to happen again.
