 "India has all qualities to protect foreign investment: FM assures FIIs")
Boston: On the second leg of his North American tour to woo investors, Finance Minister P Chidambaram has said that India has all the qualities to guarantee that foreign investment is protected.
Chidambaram, while addressing students and faculty of Harvard University on ‘The Rise of the East Implications for the Global Economy’, said, India has all the qualities that provide guarantee to investors that their investment will be protected.
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Chidambaram also underscored the need for new multilateral institutions. PTI[/caption]
Chidambaram arrived in Boston after two days in Canada to project India as a viable investment destination. He said foreign investors should be assured by emerging economies that their capital will be protected and not affected by “whims” of governments. “Emerging markets have to increase the comfort level of international investors, to improve their sense that their capital is well protected,” Chidambaram said.
“After all, why would they invest over the long term if their capital can be expropriated by a change in laws or by the whims of the government,” he said. “The best guarantor of investment protection is a stable and democratic political structure, a belief in the rule of law, and a transparent and independent legal system. India has all three,” he said. “We constantly hear of moves in industrial countries to engage in financial protectionism, to keep savings at home in order to finance overextended industrial country governments. Any move in this direction would be terribly misguided,” the Finance Minister said.
Chidambaram also underscored the need for new multilateral institutions given that economic power centres shift to the emerging markets. “Global multilateral organisations were set up to deal with a set of problems based on an agenda and a framework set by the industrial countries,” he said.
On India, China growth
India and China will drive global growth in the years to come with the growth rate in India projected to be upto 6.7 per cent between 2013 and 2014, Finance Minister P Chidambaram has said. “Going forward, China and India will continue to be drivers of world growth, with China growing at 8-8.5 percent and India at 6.1-6.7 percent between 2013 and 2014,” he said, while addressing students and faculty of Harvard University on ‘The Rise of the East Implications for the Global Economy’.
Chidambaram, who is in the US to meet investors and sell India’s growth story, acknowledged that there is “potential for tension” within the countries of the East as they compete for resources and markets.
“In recent months we have seen talk of conflict over islands, underwater resources, or even water itself. We need to work collectively to reduce these tensions and to ensure that trade, investment, and mutual gain trumps narrow self interest,” Chidambaram said in his address yesterday.
The economic slowdown in recent years has forced the world to adjust and industrial countries would now have to save more while emerging markets need to spend more, he said. “Such an adjustment will help industrial countries pay down heavy debt loads, even while leaving global demand to be supported by the emerging markets. Of course, the nature of spending will vary across emerging markets. China probably has to consume more, while India has to invest more,” he noted.
While China’s investment story has been much commented upon, “India’s is just starting out,” he said. Chidambaram noted that while India saves a lot, its savings fall short of its investment needs. India’s savings rate at its lowest in recent years was about 30 per cent of GDP.
“India needs intelligent risk capital that will ensure that investments are monitored and brought to fruition. And India needs long term patient capital that is willing to collect a return over many years,” he said.
PTI