FM in US: Making a class act out of old hat

On Friday, as India’s latest Finance Minister Yashwant Sinha wound up his five-day US visit, even the specifics of his message seemed like a replay of what his predecessors said before: the new Government would expedite projects and it would proceed cautiously on full convertibility.

So what’s new? For US investors frustrated by the lackof speedy progress in the Indian investment climate, the message was reassuring but familiar. For others, like the US administration and the multilateral agencies, who have been pressing for more liberalised policies — like opening up the insurance sector — the message was familiar and not very enlivening.

As the first BJP minister to journey abroad, Sinha did little more than signal a continuity of the policies pursued by the previous Governments. But that in itself was a pretty important mandate, considering that many foreign investors and institutions were palpitating about the BJP’s swadeshi agenda. The Government took the first opportunity to clarify the position and reiterate our commitment to reforms, said Naresh Chandra, India’s Ambassador in Washington.

That much Sinha did in fetching style. An affable, self-effacing man, the Finance Minister had by the week’s end allayed much of the fear in various quarters about the BJPs nationalist economic agenda with an exquisite disquisition aboutHindutva and swadeshi.

But what about accelerating the reforms and bettering investment climate? Despite Sinha’s claim that he saw heartwarming and unprecedented interest in India, the general feeling was that his meetings attracted the same old tired corporate flacks waiting for ongoing projects to get moving. One frustrated investor whose project has been on the line for six years now was heard saying the Government should change the fast track nomenclature to save itself the embarrassment each time the subject came up.

Notwithstanding the self-congratulatory attitude, the gathering impression here is that India is still not on the top of the list. Not even the busted economies of East Asia has made India more attractive, thanks to the change in Governments and consequent inaction on various fronts. Sinha himself admitted in a more candid moment that the failure to quickly institute proper procedures was one of the main reasons for the economic slowdown resulting in the growth rate falling to 5.5 percent from 7 per cent. So what will the Government do to change this? “Er…wait and see…”Nor did the Indian minister take well to any comparison with China, which has been gobbling foreign investment 10 times the rate of India. “Some of us are more cynical and doubtful than they (the foreign investors) are,” Sinha gently chided this correspondent when asked about the kind of interest generated among foreign investors during the visit last year of Chinese President Jiang Zemin, when Fortune 500 CEOs were virtually on all fours begging to invest in China.

Sinha and his team though are on a different track altogether. With a far more modest target in mind, they are sanguine, even smug, as they speak of doubling foreign investment this year from $ 3 billion to $ 6 billion — without once explaining how.

Conveniently, the Finance Minister ducked many pertinent questions about the new Government’s policy under the pretext that he could not talk about it because of the forthcoming budget, a document hetantalisingly said would contain many surprises.

Nothing illustrated the Indian team’s self-righteous state of mind than their presentation at the various International Monetary Fund-World Bank meetings, the primary reason for their visit.

Much of the deliberations at these meetings centered around the East Asian economic crisis and the Indian team lost no opportunity to convey how farsighted and correct it had been in following cautious policies.

So self-congratulatory did the Indians sound that when Sinha met the United States Treasury Secretary Robert Rubin, the latter urged him not to draw the wrong lesson from the East Asian crisis and allow any slowdown of the deregulation process in the Indian economy.

But as they left United States for London, Yashwant Sinha and his team were confident that they had offset any loss of momentum in foreign investor’s interest in India.

The two specific targets Sinha announced would be achieved this year — pushing growth rate back to seven per cent andincreasing foreign investment to $ six billion — were indicative of their poise and self-belief.