Washington: Investors can find no better place in the world than India that has a democracy loving and capitalist respecting environment, Union Finance Minister Nirmala Sitharaman has said. She also assured international investors at an interaction session at the IMF's headquarters that the government was continuously working to bring reforms.
"It (India) is one of the fastest growing (economies) even today. It has the best skilled manpower and a government that is continuously doing what is required in the name of reforms, above all democracy and rule of law," Sitharaman said on Wednesday. Responding to a question on why investors should allocate funds for India, she said that even if the court system is a bit delayed, India is a transparent and open society.
The rule of law works and there are a lot of reforms happening, even those to cut down delays, she said. "So you will not have anything better... democracy loving, capitalist respecting environment... in India," Sitharaman said at the event hosted by the Federation of Indian Chambers of Commerce and Industry in association with the US India Strategic and Partnership Forum.
Responding to questions from major insurance companies, who urged her to remove the cap on investment in this sector, she said the government needs to understand what the expectations of the sector are other than removing of the cap. Sitharaman said she would be quite open to it and they could send her the details. The Union finance minister, however, said she will not be able to give them an assurance at this point of time, but will work on the matter.
Asserting that the government is engaging with everyone on a weekly basis and there is no trust deficit with the corporate sector and investors, she said there is a greater understanding that this government is willing to hear and also wanting to respond.
The government is committed to maintaining fiscal deficit in India, she said. To a question on the slowdown in the Indian economy, the finance minister said the government is taking steps to address problems in the 'stressed' sectors.
"Though the budget was presented in July, in a year when there was interim budget present before the election, we didn't wait for the next budget to come in February of 2020, almost on a 10-day interval, we have been announcing one or the other intervention with which each of the stressed areas can be addressed," she said.
Overall in order to boost consumption, the government has very clearly said public expenditure for infrastructure will be clearly front loaded, Sitharaman said. "Similarly, for increasing money in the hands of the people so that consumption can improve, I've requested all the building sector banks together with their partners, non-banking, financial companies to reach out to villages, reach out to districts and extend every kind of credit that they would want," she said.
The two-prong approach makes sure consumption is boosted, both through spending on public infrastructure or by putting actual money in the hands of the people, and ensures the stress, which is specific to some sectors, is addressed, Sitharaman said. This has to be a continuous system till the time the economy really shows substantial uptick, the Union finance minister said.
Earlier in the day in New York, US-India Strategic Partnership Forum (USISPF) in partnership with FICCI, Bank of America and Citibank hosted an interaction with institutional investors. Senior members of the New York financial services industry were present for this round table that included insurance companies, debt restructuring companies, private equity, equity investors and banks.
Sitharaman's message to the industry reiterated India's commitment to transparent policy-making, implementing banking reforms in close collaboration with the RBI, creating liquidity flow, exploring ways to bring in private sector investments and deepening economic reforms.
"Our discussions with Minister Sitharaman were extremely candid and positive, building upon some extremely positive reforms that the Government has undertaken in six months," Mukesh Aghi, USISPF President said. "The Modi 2.0 government has demonstrated its willingness to deepen its collaboration with industry and create a level playing field for foreign investors. Most significantly, the industry has welcomed lower corporate tax rates in India," he said.
Aghi said the move encourages greater investments from American firms who are already betting big on India. "It was one of the long-standing asks from Forum members and included in the recommendations that we provided the government," he said.
By Lalit K Jha