Union Finance Minister Shri P. Chidambaram talks up Indian Economy

Union Finance Minister Shri P. Chidambaram talks up Indian Economy at the Second South Asian Diaspora Convention in Singapore on 21 November  2013 - Speaking at the Second South Asian Diaspora Convention on 21 November 2013, Shri P Chidambaram talked up the Indian economy. He said, “India’s potential growth rate is 8 percent and above. In the best year, the savings rate was 36.8 percent and the investment rate was 38.1 percent. In the worst years, the savings and investment rates were 30.8 percent and 32.8 percent respectively. Between 2005 and 2008, India achieved its potential – in fact exceeded it – and recorded growth rates of over 9 percent. During the 20-year period from 1991 to 2011, the average growth rate was 7 percent”.

Chidambaram added, “The key to sustain a high growth rate is investment. Other factors are also important. The fiscal deficit must be contained below the widely-accepted norm of 3 percent of GDP. The Current Account Deficit must be capable of being financed safely. Inflation, even allowing for the space required by a developing economy, must be moderate. The exchange rate must be resilient even while it is insulated against speculative attacks and excessive volatility. Any Government must be fully alive to these fundamental requirements of a stable and progressive economy. Given these fundamentals, it is investment that will determine the growth rate of an economy”.

Chidambaram invited investment in India stating, “I believe that there is no country in the world that requires so much investment as India does in virtually every sector of the economy. On infrastructure alone, the 12th Plan document covering the period 2012-2017 envisages an investment of USD 1 trillion, of which one-half is expected to come from the private sector. A few examples will illustrate the magnitude of the need and the challenge. In the power sector, the 12th Plan document projects an addition of 88,577 mega watts of capacity during the period of five years. In railways, we intend to add 10,000 kilometres of rail track while doubling 5,344 kilometres of rail track. In steel, we plan to enhance capacity from the current level of 84.4 MnT to 142.3 MnT. In the port sector, total capacity of our ports will increase from 702.8 MnT in 2012 to 884.6 MnT by 2017. We are now engaged in building 34 non-metro airports”.

On the Delhi Mumbai Industrial Corridor he said, “I may also give you the example of Delhi Mumbai Industrial Corridor. It will entail an investment of USD 90 billion. Together with the dedicated western freight corridor being built by the Railways, it will link Delhi to Mumbai’s ports. It will cover a length of 1483 kilometres and pass through six States. There will be nine mega industrial zones of about 200-250 sq. kms each, high speed freight lines, and a six-lane intersection-free expressway connecting India’s political capital to its commercial capital. Along the corridor, there will be three ports, six airports, a 4000 MW power plant, and a plug-and-play environment to promote manufacturing industries. Other corridors that are in the planning stage are the Chennai Bengaluru Industrial Corridor and the Bengaluru Mumbai Economic Corridor”.

He outlined the investment opportunities in the country thus, “India can offer to the investor a variety of investment opportunities. There are Government securities and corporate bonds. There are mutual funds and Infrastructure Development Funds. We can offer equity in our public sector enterprises that are under the disinvestment programme. There is a clutch of projects in the oil and gas sector that will welcome strategic investors. Shortly, we will offer a public sector Exchange Traded Fund that will allow you to buy units backed by underlying equity shares. Private promoters have offered a number of specific projects in sectors such as roads, power, urban infrastructure, ports and water transportation, and in Special Economic Zones’.”