\Open Forum
New
Delhi, 14 October 2015
Attracting
Foreign Investment
CONFIDENCE BUILDING STEPS VITAL
By Dhurjati
Mukherjee
India has emerged as the top
global investment destination of the world, overtaking China and US,
according to the data base of Financial
Express. The country attracted roughly $3 billion more than China and $4 billion than the US. It is
heartening to note that investors have taken special interest in the Indian
growth story in spite of not so favourable international climate.
This has been further emboldened by
the recent visit of Prime Minister Modi to Silicon Valley
with software and technology czars. As he aptly pointed out at California: “Today India has a new identity, a new image
the world over. The biggest reason for this transformation lies in your fingers
that compelled the world to shed the old notions it had about India”. The
message sent by Modi has impressed overseas investors and in spite of the fact
that the country lacks majorly in physical infrastructure development, several
multilateral agencies are now of the opinion that India is one of the top emerging
economies.
.
Recently the RBI Governor stated
that the 0.50 per cent point reduction in repo rate was part of the process of
getting investments. However, he cautioned against one instrument for tackling
all problems of the economy.
Understanding the hallmark of Modi’s
politics, going back to his years as the Gujarat
chief minister, it has been an amalgam of modernity -- represented by
technology, infrastructure and economic growth – with a certain brand of
Hindutva, underpinned on the RSS’s version of nationalism. If the latter is
kept under check and does not disturb the economic growth process, the best
results can be expected. But this is easier said than done as is clearly
manifest from the sporadic incidents relating to consumption of beef and
conversions.
The initiatives taken by the
government like ‘Make in India’,
‘Digital India’ have sent the right signal to foreign investors. But though
there is aggressive marketing led by no less than the Prime Minister himself,
the need for major reforms in the home front is acutely felt. The areas where
investors are eagerly awaiting reforms include tax policy, labour laws and last
but not the least cutting red tape. Added to this is the need to curb political
interference in the functioning of units which has been a major problem in some
States.
There is a feeling that Modi’s
leadership is changing India
but to make this a reality lot of changes are called for. Apart from reforms,
there is need for giving the much-needed stress on infrastructure development
and ensuring that roads and power projects in particular are allowed to come
up, specially in the deficient States.
Way back in 2009 Goldman Sachs had
estimated that India will
need to invest US$1.7 trillion on infrastructure projects before 2020 to meet
its economic needs, a part of which would be in upgrading India's road
network. It may be mentioned here that the Government is attempting to promote
foreign investment in road projects. Foreign participation in Indian road
network construction has attracted 45 international contractors and 40
design/engineering consultants, with Malaysia,
South Korea, United Kingdom and United States being the largest
players.
With better highways and power and
telecommunication facilities would manufacturing with foreign participation be
developed in the country in a big way? Service sector has been growing quite
rapidly and if western technology comes to the country in the form of tie-ups,
the sector would expand in a big way and generate more employment.
A new cadre of change agents has to
be nurtured at different levels, right from the bureaucracy at the top to right
down at the panchayat level. The massive Skills India programme is another
project to make available trained personnel having practical skills which is
very much needed for the development of industrial units.
Making the programmes taken by the Government
a reality is, no doubt, a challenging task for which a new genre of bureaucrats
and political leaders would be necessary. They would have to be sincere and
ensure that the targets are achieved and there is no corruption in executing
them. But it has to be admitted that lack of professionalism is a big
impediment in achieving the targets and also reaching out to the desired
stakeholders.
Though the country’s high population
growth and undeveloped regions have to be tackled effectively with resources
being a constraint, the present Government has a big challenge which is easier
said than accomplished. One may mention here a recently released report of the
World Bank which found that in 2012, 50 per cent of the world’s poor lived in
this country. However, in spite of all this, the Government has to combine the
social principles of economic life with hard-pressed reforms to make India a
cherished destination for foreign investors.
While Japan
has already informed its intention to invest in a big way in various projects,
specially relating to infrastructure development -- and in particular the
Delhi-Mumbai industrial corridor -- some of the assurances of China should
also materialize in the coming years. It needs to be mentioned that both these
countries are very much interested to give their expertise in high-speed
railway network and also partly fund these. Apart from these countries, the
investors from the European Union and the US have also to be attracted in a
big way towards the much-needed projects. Recently Prime Minister signed 18
pacts with Germany
in critical sectors such as defence, intelligence, security and clean
energy.
Though lot of promises have been
made and the overall climate appears encouraging with the growth expected to be
around 7.5 per cent in the current fiscal, bringing foreign investment to the
country at the earliest is a indeed a big challenge. There is need for an
attitudinal change both of the political leadership and the bureaucracy to
ensure that the real investors find the country secured while at the same time,
keeping a check on their projects and its effects on the Indian economy.
All efforts by Modi to woo foreign
investors and revive the economy will prove meaningless as long as there is
something untoward in the country – be it economic, social or religious – which
could cause concern to the international community. As he maintained recently,
all efforts should be geared towards economic development and poverty
eradication rather than fighting between one community and the other. Thus, the
Government has to be very careful about fundamentalists who are bent to disturb
communal peace and create social chaos.---INFA
(Copyright,
India News and Feature Alliance)
|