FM hardsells in Japan, says India can absorb $50 billion FDI every year.

TOKYO/ NEW DELHI: Finance Minister P Chidambaram on Monday said that the Indian economy is capable of absorbing $50 billion foreign direct investment (FDI) annually, as he pitched India as an attractive investment destination.

Chidambaram, who is on a threeday visit to Japan to promote India, was addressing a press conference in Tokyo. "FDI flows into India are quite positive... think we can absorb, easily absorb $50 billion of FDI every year into India," he said, adding that foreign investors continue to place confidence in India.

After taking over as finance minister in August last year, Chidambaram has travelled to Singapore, Hong Kong, Germany, Canada and the UK to create investor interest in India.

This is his first such visit after the February 28 budget in which he managed to deliver on his promise to keep fiscal deficit to below 5.3% of GDP. Chidambaram reiterated that the government is committed to economic reforms and assured investors that growth will pick up in the new financial year that began on April 1.

"A new trade policy will be announced in about three or four days and that will show that we are committed to reform," he said.

Chidambaram said that Indian economy was growing between 5 and 5.5% in the just-ended financial year which he was not happy with. "I am not happy. We are growing at only 5 to 5.5%... because our people require at least an 8% growth," he said, adding India's potential growth is 7% a year.

"We have to sort out many internal issues. We have to contain fiscal deficit. We have to tame inflation. We have to find ways in which projects are executed on time and efficiently. We are addressing these problems. These in my views are biggest challenges facing India today", he said.

The Economic Survey has pegged India's growth at between 6.1% and 6.7% in the current year.

His budget for the current year has assumed a growth rate of 6.5%. On fiscal deficit, he said, it was brought down to 5.2% in 2012-13 and the government hopes to bring it down 0.6% every year to reach 3% of GDP by 2016-17. Chidambaram acknowledged that the record high current account deficit is a matter of concern but added that in 2012-13 it has been financed by foreign exchange inflows, without touching the country's foreign exchange reserves. "In fact we may have even added to our foreign exchange reserves," he added.

The current account deficit (CAD) jumped to a record high of 6.7% of GDP in October-December quarter, driven mainly by large trade deficit on account of higher oil and gold import.

The finance ministry, however, had said that it was not surprised by the "large" CAD and the government and RBI will take additional steps to contain it.

"The number (6.7%) is large though not surprising ... Both RBI and the government will continue to monitor the CAD and will take additional steps whenever warranted," the finance ministry had noted in its statement.

Finance minister said India will support former Japanese vice Finance Minister for International Affairs Takehiko Nakao for the post of President of Asian Development Bank (ADB).

The 67 member states of ADB will vote by April 24 to elect the President of the lending agency.


Source : economictimes.indiatimes.com