Be part of our growth story: PM to US firms

India’s free-market architect prime minister Manmohan Singh received energetic applause on Monday from the US Chamber of Commerce when he pledged to accelerate economic reforms tipped to set India back on course to achieving 9% growth in two years.

“India is the second largest of the dynamic emerging economies. Like other emerging market economies, we too have been affected by the crisis of 2008. Our growth rate has decelerated to 6.7% in 2008-09 and will remain at around 6.5% in the current year,” Singh said. “However, we expect to accelerate from this level and get back to a growth of around 9% within two years.”

Singh said he had many reasons to believe that the Indian economy would expand even though slower growth in industrialised countries will limit Indian exports.

“Our domestic savings rate has increased very substantially and supported an investment rate of 39% in 2007-08, most of it being in private investment,” said Singh.
 
US companies are waiting to see how much Singh’s government will open India — where key sectors like retail and finance are protected — to the tough embrace of globalisation. Even those bullish on the country’s future say if further liberalisation comes, it will come Indian style — which is to say, slowly. But Singh pledged to pick up the pace of reforms.
 
“Wherever I meet businessmen to talk of our plans for the future, the question I am most often asked is whether economic reforms will continue. You should have no doubt on that score. The economic reforms of the past have brought us advantages and I can assure you that we will continue down the road,” said Singh. “We might do it gradually, and in a manner which builds a consensus for change. But I assure you we will persevere,” he added.
 
He focused US investment attention on India’s roads and highways and revived foreign interest in India’s massive infrastructure development, particularly roads and highways. India’s road network of 3.32 million km is second only to the US and is in need of major upgrades.
 
“A major weakness that limits our growth possibilities is inadequacy of hard infrastructure. We need massive investment in energy, transport and urban infrastructure to be able to support a high rate of growth. Expanded investment in these areas will help offset weak export demand by providing a domestic demand impetus to support higher growth,” said Singh.
 
India is set to launch the world`s biggest Public Private Partnership program that will result in the development of 15,000 km of roads and highways over the next three years at a cost of $70 billion (about Rs 350,000 crore). The current five-year plan calls for $500 billion in upgrades to India’s infrastructure sector — with about one-third of the investment coming from the private sector.
 
“We are very bullish on India,” said PepsiCo chief Indra Nooyi, who attended the meeting. The US soft-drinks giant Pepsi has indicated that it will invest $500-million in India over three years to buy local Indian brands.