06-14-2006, 05:54 AM
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->India Seeks EU Investment in Farms, Infrastructure
Peter Dhondt
BRUSSELS, Jun 13 (IPS) - India's economy can grow by ten percent a year, if it is able to attract massive investments in agriculture and infrastructure. And Europe can help, says India's finance minister Palaniappan Chidambaram.
The Harvard-educated minister, a firm believer in free trade, explained Monday at a seminar of the European Policy Centre (EPC) and the Sasakawa Peace Foundation, how Europe could participate in India's growth.
After Prime Minister Manmohan Singh, a former World Bank economist, Chidambaram is the man associated most with putting India firmly on the path of economic liberalisation, that was begun 15 years ago.
India is still not among the heavyweights in the European trade statistics. In 2004, only 1.6 percent of European imports came from India. But that is bound to change. By 2026, India's economy is expected to be one of the three largest in the world, and by 2050, it could overtake the US economy.
Chidambaram is thinking big. "We will preserve our leadership in the international services sector, but we also intend to make India a hub for manufacturingà we are already among the world's leaders in textile, leather, steel and pharmaceutical products, and many other sectors can follow."
But that is one of the medium-term goals. First, the country of 1.2 billion people will have to improve its underdeveloped or outdated infrastructure -- ports, highways, railroads, energy and communication networks. "We are currently building 4.2 km of main roads a day. One km costs six million (US) dollars. And India is establishing five million new mobile telephone connections a month -- a massive investment as well."
Much more needs to be done. "Every year, India needs 10,000 Mw of new power generating capacity. A thousand Mw costs one billion dollars. These are mind-boggling investment amounts, but we have to mobilise them."
India is ploughing large amounts of public funds into agriculture, the mainstay of the majority of Indians, to make it less rain dependent. "Our goal is to bring ten million hectares of land under irrigation the next five years", said Chidambaram.
The bulk of the money that India is investing now comes from Indian sources, although foreign investors put in a record 10.5 billion dollars last year. "We realise the importance of foreign investment,'' said the finance minister. According to him, companies or investors from abroad introduce new ideas, technology and contacts. But, Europe still has to wake up to the Indian call. In 2003 and 2004, only 0.2 - 0.3 percent of European foreign direct investment went to India.
India is not growing for the sake of growing, Chidambaram said. "Growth is the best antidote to poverty, it is not sufficient, but imperative,'' the finance minister argued. Apart from that, India has to create jobs for the eight million youth entering the labour market every year. "India is the only big country where the size of the working population is still growing. That is a demographic advantage, but we have to frame economic policy accordingly."
Only a fast growing economy can give India the revenue that is necessary "for the desperately needed investments in infrastructure, education, health care and rural growth", Chidambaram continued. And India needed to â'catch up with developed countries and prevent being outpaced by countries like China".
Several external factors were challenging growth in India, starting with high oil prices. "In my view, there is no justification for these outrageous prices. It's worse than in the colonial age. The colonial masters robbed our cotton and our iron ore, but now, even our vital growth capacities are destroyed. The world has to unite to find a solution to this crisis."
European and other countries could also play a role in keeping two other threats under control -- global imbalances resulting from the fact that "some countries run huge deficits and others build up huge reserves", and rising interest rates that might reverse capital flows in the world.
Chidambaram said that he is waiting for a "reasonable offer" on agriculture from the developing countries that might restart the international negotiations on trade liberalisation.
Together with other developing countries, India would like Europe and the U.S. to remove agricultural subsidies and market protection before agreeing on measures to further reduce industrial tariffs and start negotiations about trade in services and investment rules. "Everything depends on agriculture,'' Chidambaram concluded. (END/2006) <!--QuoteEnd--><!--QuoteEEnd-->
Peter Dhondt
BRUSSELS, Jun 13 (IPS) - India's economy can grow by ten percent a year, if it is able to attract massive investments in agriculture and infrastructure. And Europe can help, says India's finance minister Palaniappan Chidambaram.
The Harvard-educated minister, a firm believer in free trade, explained Monday at a seminar of the European Policy Centre (EPC) and the Sasakawa Peace Foundation, how Europe could participate in India's growth.
After Prime Minister Manmohan Singh, a former World Bank economist, Chidambaram is the man associated most with putting India firmly on the path of economic liberalisation, that was begun 15 years ago.
India is still not among the heavyweights in the European trade statistics. In 2004, only 1.6 percent of European imports came from India. But that is bound to change. By 2026, India's economy is expected to be one of the three largest in the world, and by 2050, it could overtake the US economy.
Chidambaram is thinking big. "We will preserve our leadership in the international services sector, but we also intend to make India a hub for manufacturingà we are already among the world's leaders in textile, leather, steel and pharmaceutical products, and many other sectors can follow."
But that is one of the medium-term goals. First, the country of 1.2 billion people will have to improve its underdeveloped or outdated infrastructure -- ports, highways, railroads, energy and communication networks. "We are currently building 4.2 km of main roads a day. One km costs six million (US) dollars. And India is establishing five million new mobile telephone connections a month -- a massive investment as well."
Much more needs to be done. "Every year, India needs 10,000 Mw of new power generating capacity. A thousand Mw costs one billion dollars. These are mind-boggling investment amounts, but we have to mobilise them."
India is ploughing large amounts of public funds into agriculture, the mainstay of the majority of Indians, to make it less rain dependent. "Our goal is to bring ten million hectares of land under irrigation the next five years", said Chidambaram.
The bulk of the money that India is investing now comes from Indian sources, although foreign investors put in a record 10.5 billion dollars last year. "We realise the importance of foreign investment,'' said the finance minister. According to him, companies or investors from abroad introduce new ideas, technology and contacts. But, Europe still has to wake up to the Indian call. In 2003 and 2004, only 0.2 - 0.3 percent of European foreign direct investment went to India.
India is not growing for the sake of growing, Chidambaram said. "Growth is the best antidote to poverty, it is not sufficient, but imperative,'' the finance minister argued. Apart from that, India has to create jobs for the eight million youth entering the labour market every year. "India is the only big country where the size of the working population is still growing. That is a demographic advantage, but we have to frame economic policy accordingly."
Only a fast growing economy can give India the revenue that is necessary "for the desperately needed investments in infrastructure, education, health care and rural growth", Chidambaram continued. And India needed to â'catch up with developed countries and prevent being outpaced by countries like China".
Several external factors were challenging growth in India, starting with high oil prices. "In my view, there is no justification for these outrageous prices. It's worse than in the colonial age. The colonial masters robbed our cotton and our iron ore, but now, even our vital growth capacities are destroyed. The world has to unite to find a solution to this crisis."
European and other countries could also play a role in keeping two other threats under control -- global imbalances resulting from the fact that "some countries run huge deficits and others build up huge reserves", and rising interest rates that might reverse capital flows in the world.
Chidambaram said that he is waiting for a "reasonable offer" on agriculture from the developing countries that might restart the international negotiations on trade liberalisation.
Together with other developing countries, India would like Europe and the U.S. to remove agricultural subsidies and market protection before agreeing on measures to further reduce industrial tariffs and start negotiations about trade in services and investment rules. "Everything depends on agriculture,'' Chidambaram concluded. (END/2006) <!--QuoteEnd--><!--QuoteEEnd-->