I think … we are not restricting. We are opening up in a gradual manner
Finance minister P Chidambaram today rejected suggestions that India is imposing restrictions on investments and said the countrys economy is opening up in a gradual manner.
I think the right way to look at it is we are not restricting. We are opening up in a gradual manner. Where were we in 1991? What are we today,in 2013? In the space of 22 years we have opened practically 90 per cent of Indias economy, Chidambaram told the Charlie Rose Show in an interview.
There are still some areas which are closed or which are restricted. But they will open up. But the areas that are being opened up are so large,all this manufacturing. Steel,power,roads,airports,seaports,all this is open. Therefore,theres a huge opportunity for investors, he emphasised.
Observing that India has opened up 90 per cent of its economy in the 22 years of liberalisation since 1991,Chidambaram said that the country could become a giant economy if it grows at eight per cent continuously for seven-eight years. See,our savings rate in the worst year was 30 per cent. In the best year,was 36 per cent of GDP. Pick any number between 30 and 36 for incremental capital output ratio,what economists call ICOR,is about 4. Our potential growth rate is about 8 per cent, Chidambaram said.
If we continue to grow at 8 per cent for,say,7 years or eight years or ten years,like China did at 10 per cent for over ten years,it compounds,and we become a giant economy, he said.
Chidambaram is currently in Washington to attend the annual Spring meeting of the International Monetary Fund (IMF) and the World Bank. Noting that India does not encourage joint ventures with the government,Chidambaram said in most areas,New Delhi allows 100 per cent foreign direct investment.