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Indian Minister Pledges Further Opening to Foreign Investment

Posted on: Sunday, 27 November 2005, 12:00 CST

Text of report by Indian news agency PTI

New Delhi,StartDateStartDate 27 November: Outlining the reform roadmap for 8 per cent growth, India's Finance Minister P Chidambaram Sunday promised to open up more sectors to Foreign Direct Investment [FDI] and push up public investment in farm and infrastructure sectors.

"We must open the doors far and wide for FDI in more sectors... [ellipsis as carried] FDI worked wonders in China. I believe it can work wonders in India," Chidambaram said inaugurating 21st India Economic Summit organized by World Economic Forum and Confederation of Indian Industries (CII).

Asked about the long pending demand for allowing FDI in retail, he said Commerce Ministry has already started a public debate on the issue.

"The ministry will be able to arrive at a solution that will satisfy all," he said indicating it would be decided within four months.

Asserting FDI and higher investment in infrastructure and farm sectors were key to sustaining high growth, he said "eight per cent is not a magic number. No finance minister can conjure a 8 per cent growth [as received]."

Asked if coalition politics was a drag on reforms and growth, he said India's United Progressive Alliance coalition government achieved 7 per cent growth and coalition partners were committed to pushing it to 8 per cent.

GDP growth is made up of three numbers - how fast agriculture, industry and services can grow, he said, identifying two initiatives each for the three sectors.

Admitting that India's farm sector was still dependent on monsoon and prone to natural calamities, Chidambaram said "the answer is - put large public funds for irrigation."

Government was committed to restore and repair 5,000 water bodies in the country, he said adding 25-30 last mile irrigation projects would be completed this fiscal.

Admitting that high growth in industry and services depended on infrastructure, Chidambaram said "we are aware that there is a huge infrastructure deficit."

The newly set up Infrastructure Special Purpose Vehicle will mobilize 2-2.5bn dollars and leverage another 3-4bn dollars, he said adding the Viability Gap Funding mechanism would also enable India to address funding problems for mega projects.

"All put together along with infrastructure, it will enable India to achieve 8 per cent growth... We have the will and the way to achieve it," he said.

Terming the relationship between land and the tillers as "sacred", Chidambaram said while land would continue to be owned by tillers, government would encourage entry of corporates [as received]in a big way in pre and post harvesting activities.

"It is important for corporates to enter agriculture in order to take agriculture growth to over 4 per cent," he said.

He said corporates must take up activities like food processing, grading, sorting, packaging, supply chain, marketing and bring the final produce to consumers.

For pushing up industrial growth, he said the mantra should be to allow more FDI in industry and emulate the Chinese example.

Moreover, he said India should be become an "innovative society" as being a mere industrial society was not enough.

Citing Japan and Korea, Chidambaram said it was necessary for India to gain dominance through product leadership.

He asked India Inc to step up funding in R and D as the demand was more for product engineering and design.

Source: BBC Monitoring South Asia

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