PM promises hard decisions to free economy

Making an all-out attempt to woo US investment to India, Prime Minister Manmohan Singh, on Wednesday, told nearly two-dozen top American CEOs that India would take all necessary 'hard' decisions to free the economy from bureaucratic controls and assured them that compulsions of coalition politics and Left support will not derail reforms.

Speaking at a luncheon hosted by Indian Ambassador Ronen Sen and NYSE's CEO John A Thain, at the New York Stock Exchange, Singh, in his remarks, where he traced the genesis of India's economic reforms, said, in 1991, "India opened a new chapter in its torturous history," noting that while the country was "always a free economy," it was shackled by "a lot of bureaucratic controls."

"Bureaucracy is like a horse. You can take it in any direction. It all depends on where you want to take it and it depends entirely on the quality of the jockey."

He pledged that the Indian government "will ensure that the bureaucratic process instead of placing hurdles will be an active promoter of foreign investment," and added, "you have my assurance that we have all the instrumentalities in place to carry forward our program," for continuing economic reforms."

"In 1991, we took the momentous decision in that India's future lies in integrating itself to the evolving global economy. Only then can India's vast latent potential be fully realised."

Singh said, "Today, I wish to tell you that we've merely scratched the surface, and the best is yet to come," and noted that vast areas of opportunity for US businesses remain "unexplored and unexploited and it's our duty to exploit that latent potential."

Talking about India GDP growth, Singh said, today, India happens to be one of the fastest growing countries in the world -- growing at an average of over 6 per cent "and our expectation in years to come is that this can go up to 7 to 8 per cent and maybe more."

Singh, while addressing the heavyweights of US companies and conglomerates that account for over $1 trillion in assets, said his presence at the NYSE was especially significant because it signals "the importance I attach to attracting investment to India and of our commitment to capital markets as sources of finance."

The prime minister the first Indian leader to be invited to not only visit the NYSE but also make a keynote address to some of NYSE's listed companies, spoke of how important the United States was to India as a strategic partner, "not only politically but economically, "because it is not only the largest economy in the world and the largest trading nation, but a dynamic, open economy; an engine of growth for the rest of the world through its trade and an unparalled source of investment, technology and skills."

He then wasted no time in making a strong pitch for major US investment in India and why India was such a good story that should be part and parcel of every American company's global investment strategy.

Singh said that besides India being an English-speaking open society where the rule of law reigns supreme, the country offers "an excellent potential R & D base, strong science and technology capabilities and has one of the largest pools of trained technical manpower."

"The low operational costs, a large domestic market, "envisages opportunities in a range of areas", the prime minister noted, and spoke of the success of information technology and related industries like business process outsourcing, which offered "excellent and cost effective opportunities."

He pointed out that "major changes have taken place in the way services are delivered," and added, "technology is leading to the fragmentation of service delivery processes and portions of this could be done at other locations."

Singh said examples of such services included processing financial transactions, insurance claims, and architectural and engineering designs. There were also pharmaceutical and biotech and other rapidly growing sectors, "with low cost R&D opportunities."

He also disclosed that another "hidden success story happening in India" was in the manufacturing sector and noted that "a protected domestic industrial sector -- including automobiles, auto components, engineering goods, steel and metals -- has restructured itself drastically over the last decade under threat of greater competition and has shown excellent capabilities."

However, Singh acknowledged that infrastructure is "one major problem" in India and "several sectors require urgent upgradation and our need for a quantum leap in capability is self-evident."

He said India needs over $150 billion in investment -- which he described as "a conservative estimate"-- to alleviate its infrastructure and there is no way it can be met with domestic resources.

Saying there is "maximum political consensus on investment" in infrastructure development, Singh said that there were "great possibilities for American skills and capital " and the "scope for engineering, manufacturing and financial enterprises to participate in the opportunity," are limitless.

Singh said he was so committed to infrastructure development in India that he himself heads the committee on infrastructure "to eliminate policy bottlenecks," adding that the government is working towards "developing viable attractive public private partnerships and investment opportunities in infrastructure."

Other policy directives to attract infrastructure investment, the prime minister said, included the establishment of an investment commission with an envoy extraordinary; stable, incremental FDI policy "which will actively seek investment, particularly in high technology, manufacturing and export sectors."

After the luncheon and taking questions from the CEOs, which took a good part of two hours, the prime minister took a walkabout on the trading floor amidst several rounds of applause from the traders.

Some of the top executives and chairman at the luncheon included:

Charles Prince, CEO of Citigroup; Robert E Rubin, the chairman of the board of Citigroup; Maurice Greenburg, chairman and CEO of American International Group; Harry M Paulson, Jr, chairman and CEO the Goldman Sachs Group; Harold McGraw III, chairman, president and CEO of The McGraw-Hill Companies; William B Harrison Jr, chairman and CEO, JP Morgan Chase & Co; S Y Sternberg, chairman and CEO, New York Life Insurance Company; John Rutherford Jr, chairman and CEO, Moody's Corporation; Kenneth Chenault, corporate CEO, American Express Company; Peter R Kahn, chairman and CEO, Dow Jones & Company; Michael A Redenbaugh, CEO, Bell Helicopter; Gene Hall, CEO, Gartner Inc; Judith A McHale, president and CEO, Discovery Communications Inc; and Wilbur L Ross, chairman and CEO, International Steel Group.

Also represented were the India corporate heavyweights, including Satyam, Videsh Sanchar Nigam Ltd, Dr Reddy's Lab, Wipro and ICICI.