Finance Minister P Chidambaram on Thursday appealed to foreign investors to invest in India, assuring lower fiscal deficit and current account deficit (CAD), stable currency, high growth and moderate inflation.
“India’s potential growth rate is eight per cent and above… The fiscal deficit must be contained below the widely-accepted norm of three per cent of gross domestic product. CAD must be capable of being financed safely. Inflation, even allowing for the space required by a developing economy, must be moderate. Exchange rate must be resilient even while it is insulated against speculative attacks and excessive volatility,” he said at the Second South Asian Diaspora Convention in Singapore. Assuring investors that volatility and speculation in the currency markets had been addressed, Chidambaram said the exchange rate of the rupee today is a better reflection of its true value.
“We are confident that both volatility and speculation have been largely contained.”
More From This Section
On infrastructure alone, the 12th Plan document covering the period 2012-2017 envisages an investment of $1 trillion, of which one-half is expected to come from the private sector.
“India can offer 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,” said Chidambaram.
He added the Indian equity market has given a compounded annual growth rate of 15.8 per cent during the 10-year period of 2003-2013; government securities have given a return of 7.92 per cent, 8.52 per cent and 8.36 per cent, respectively, in the last three years.
The finance minister also said a special window to attract more funds into foreign currency non resident (bank) accounts or FCNR(B), opened by the Reserve Bank of India two months ago, will close on November 30. It has so far received $16 billion. FCNR(B) allows the account holder to retain his deposits in foreign currency and earn interest at a rate up to LIBOR-plus 400 basis points.
The Indian diaspora is estimated at over 20 million. While it is only two per cent of India’s population, their total wealth is estimated at $1 trillion, which is nearly 50 per cent of India’s GDP. Of the $1 trillion, one-half is estimated to be financial assets. Their income is estimated at $400 billion a year.