US Treasury Secretary Timothy F Geithner, on his first visit to India, has called for closer ties between the two countries to create a balanced global economic growth. He made a case for enhancing the partnership and pulling the world out from the worst economic recession post-World War II.
India, on the other hand, invited the US to invest in the country’s infrastructure which requires a trillion-dollar infusion. The two sides launched the India-US Financial and Economic Partnership that would be instrumental in discussing strategies to promote financial sector reforms in both the countries.
Finance Minister Pranab Mukherjee said India and the US had substantial infrastructure needs and both would seek to create a stronger dialogue on an ongoing basis for a potential private-public partnership in order to unleash critical infrastructure investment.
“Immense opportunities are there for investment in the infrastructure sector. As much as $600 billion can be invested in port, communications, roads in the next five years,” Mukherjee said at a joint press conference with Geithner.
The US treasury secretary, who as a child had spent five years in Delhi's posh Friends Colony, is on a two-day visit to India. He met Prime Minister Manmohan Singh, Pranab Mukherjee and Planning Commission Deputy Chairman Montek S Ahluwalia today. He also held several high-powered meetings with senior officials from the finance and commerce & industry ministries. He would be in Mumbai tomorrow to meet the leaders of the Indian industry.
Geithner took over as treasury secretary at a time when the US was caught in the throes of one of the worst downturns in its history. He said lack of confidence in the US was a resultant of not only the financial crisis but also the policies of its government which compromised on education and health. Envisioning a future of healthy and sustained growth for both India and the US, Geithner said the challenge in both the countries was to bring about policy and financial reforms.
Lauding India’s efforts to come out of the downturn with a “steady hand”, Geithner said India was an “indispensable partner in securing the future prosperity and security of the world and we are working towards having a more global and open multilateral trading system”.
The two country’s bilateral trade currently stands at $40-45 billion.
“Our ability to cooperate on economic and financial issues will be critically important to the success of global efforts to create conditions for a more stable global financial system, more balanced global economic growth that is less dependent on the willingness of Americans to live beyond our means, more effective and representative international financial institutions, and a more open global trading system,” he said.
Citing India's demonstrated ability to compete in the global market, and a commitment to quality higher education, the treasury secretary said the country's economic growth was already impressive and would be even stronger in the future.
Drawing a parallel between India and the US, he said the two countries faced the problems of designing a private financial system and strengthening financial services outside of the banking system.
He agreed to India’s demand for greater representation in the World Bank and International Monetary Fund. “We are working together to help make sure that we strengthen the financial institutions like the World Bank and the IMF, and make them more representative by giving them a more financial base.”
Mukherjee said the India-US Financial and Economic Partnership would emphasise on the discussions concerning economic developments that would emerge out of global forums such as the G-20.
“The discussions held today focused on global development with special emphasis on US and Indian economies, including monetary and fiscal policies, financial sector regulations and managing capital flows,” the finance minister said. The next such meeting on economic and financial partnership would take place in the US at the Cabinet level led by Geithner and Mukherjee.
In a separate joint discussion on the post-crisis world with Ahluwalia, Geithner expressed optimism that India with a strategy centred around reforms could achieve 9 per cent growth in the coming years.
Ahluwalia further said it was in India’s interest that the US should get back to a healthy growth rate. He said currently the business conditions in India were marked by a lot of optimism or “animalistic fervour”, and in the long run a strong recovery in the US would further India’s prospects. He added that he was quite optimistic about the inflow of foreign investment in India in the coming years.
Both Geithner and Ahluwalia stressed the need for anti-protectionist measures and said financial innovation and reforms in both the countries should continue in order to further the agenda of inclusive growth in both the countries.
