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The Indian economy will shortly witness a new chapter opening with the entry of foreign money into the highly competitive retail business as well as rolling out of pension and labour reforms, Union finance minister P Chidambaram hinted on his visit at Surat to attend the industrial and trade fair Udyog 2006 on Saturday.
After his speech, he attended a party organised by Surat-based industrialist and Member of Parliament, Jivabhai Patel.
Asked about the changes in foreign direct investment (FDI) rules in retail business in the upcoming union budget, he replied, "FDI in retail business is due."
Questioned on the fate of pension and labour reforms that have been a bone of contention between the Left and the ruling UPA government, he answered, "Reforms in both the matter is due".
The support of Chidambaram for FDI and his opposition to the behaviour of the Left in labour and pension reforms being urged by some in the UPA government dominated his speech.
Chidambaram said tax rates must be moderate, reasonable and must leave bulk of money in the hands of people to decide where they want to save.
Savings led to high flow of money for investments. "Savings can be ploughed back to invest, as more we invest more we grow," said Chidambaram. If the internal savings fell short of investment, then India had to tap foreign savings which was FDI. "So why we must stop foreign investment," he asked.
He substantiated his argument by referring to the growth of the textile industry after some items where removed from the reserved list and led to higher FDI investment in those units, helping the textile industry survive tough years.
"At present India is at a historical point. If we take a right turn we can remain at a 8 per cent growth rate for next 20 years and if we take a Left turn, then we may slip to 6 to 5 per cent growth rate", warned Chidambaram.
He urged the Left parties, "If we work together and our friends from Left and right work together, we can make it." "Allow us to take our decision for the time given to us and to implement them," said Chidambaram.
