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'India is open for business'

By Archana Masih in Mumbai
March 20, 2006 08:05 IST
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India is open for business was the message delivered by Montek Singh Ahluwalia, deputy Chairman of the Planning Commission, at the Asia Society Conference in Mumbai on Sunday.

The Oxford-educated economist was introduced by former US ambassador to India Frank Wisner as being pivotal to India's economic reform process.

In a short and extempore talk, Ahluwalia said the economy had done well and the Indian people perceive that there have been a lot of gains due to globalisation.

"That has translated to a political consensus that this is the right thing to do," he said referring to India as the second fastest growing country in the developed world.

In the current financial year ending March, the estimated growth rate is around 8 per cent while the average growth rate in the last three years was a little below 8 per cent. Ahluwalia said observers feel that enough structural changes had taken place and the Indian economy could now aim at a growth rate of above 8 per cent.

He said the Planning Commission was currently working on a feasible target of more than 8 per cent.

"The good thing is that we are not being complacent. If we continue good macro management and a reasonable process of reform with no back tracking we are on a cruising speed of 7 per cent."

"But the prime minister has said that is not good enough, and we find is that India can aim towards 9 per cent which is feasible in the medium term."

Borrowing from what Prime Minister Manmohan Singh mentioned the previous evening, he said the inclusiveness of growth was very critical. "While the rest of the economy has surged, modernisation of agriculture is a very high priority and crucial for creating an environment where growth will spread to rural areas."

He listed the other positive indicators for India like the government's commitment to creating an investor friendly environment; improving rural and urban infrastructure; paying attention to the social sector and increased business involvement with South East Asia and China.

Speaking to delegates of 23 countries -- including 200 from China -- he added that Foreign Direct Investment was taking great interest in India than before and with continued efforts to improve the investment climate, India could expect a further increase in FDI, private investment and globalisation of Indian industry.

Stressing the need for good quality infrastructure required for industry, he said there was a very big gap between the quality of infrastructure available in East Asia and India.

"Indian involvement in business in South Asian countries serves as an effective means of benchmarking. Rather than trying to create political mileage by saying 'make Mumbai like New York,' it makes sense to benchmark India with other countries in East Asia because people have seen that happen in a period of ten years."

He said the expectation was that government should provide the environment to enhance infrastructure and lead the way. Infrastructure was a huge spectrum. On one end was rural infrastructure -- agriculture, telecom, water, health, education; and the other end was urban infrastructure -- modern telecommunication, airports, ports, roads, modernization of railways etc.

The amount of investment needed for India's infrastructure was huge and there were areas which could only be done by the public sector and areas where the private sector was capable of providing that infrastructure like in airports, roads, telecommunications, power and the recent announcement of bringing private competition in railways.

"It can't be all done by the private sector, the government will have to play a very big role."

Acknowledging that there were problems in these areas -- like in the power sector -- where it has not been easy to create an environment where private investment would surge ahead, he said the bottom line is a policy framework where government money and initiative can leverage the largest possible response from private investment to build infrastructure.

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Archana Masih in Mumbai