The Hindu : Business : Chidambaram for investment-led growth

Online edition of India's National Newspaper
Tuesday, Dec 28, 2004

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Chidambaram for investment-led growth

By Our Special Correspondent

The Union Finance Minister, P. Chidambaram, discussing with the outgoing President of the Federation of Indian Chambers of Commerce and Industry, Yogendra K. Modi (right) and the FICCI President-elect, Onkar S. Kanwar, at the annual general meeting of the chamber in New Delhi on Monday. — Photo: Shanker Chakravarty

NEW DELHI, DEC. 27. The Government would pursue an investment-led growth policy in the coming years to sustain a 7-8 per cent economic growth, following a 26.9 per cent jump in investment proposals till October, P. Chidambaram, Union Finance Minister, today said.

The Government's preference for investment-led growth is based on the realisation that such growth was sustainable, Mr. Chidambaram said while inaugurating the annual meeting of the Federation of Indian Chambers of Commerce and Industry.

"There are many paths to achieve growth. It could be dole-led, subsidy-led or concession-led growth. But none of them are sustainable. What is sustainable is investment-led growth,'' he said adding that India must demonstrate the capability to sustain a high 8 per cent growth for the next 10 years and that would require a massive investment.

While asking India Inc to step up investment, he said though the economy logged over 7.5 per cent growth in some of the years since 1994 and clocked 8.2 per cent last fiscal, it was "sporadic'' in contrast to China's sustained high growth, which pursued investment led growth.

Investment proposals were at Rs. 15,43,378 crores in October 2001, which came down by 2.8 per cent a year later and further dipped by 5.7 per cent to Rs. 14,13,698 crores in October 2003. Investments have since then picked up by 26.9 per cent to Rs. 17,93,979 crores till October 2004, mainly on account of major projects coming up in chemicals and petrochemicals, metals, mining, electricity and road sectors, the Finance Minister said.

Observing that all these augur well for future and India Inc has rediscovered its confidence, he said that the next year would be better (for the economy) than 2004 and industry bodies to come up with proposals for specific sectors before the newly set up Investment Commission so that the Government could take necessary steps to spur investment in those sectors. He said the Cabinet Committee on Infrastructure, chaired by the Prime Minister, has taken a major decision on power and civil aviation sectors in the last two weeks and industry should now come up with investments proposals in these sectors too.

Moreover, the Inter-institutional Group (IIG) has come up with reports in some of the sectors but except some response in the airport sector, India Inc is yet to evince much response in other sectors such as roads, power, ports and tourism.

He asked India Inc to line up massive investment instead of allowing foreign direct investment to hog the limelight and said investment in the country would pick up from India Inc, retail investors and when savers turn into investors.

Job reservation in private sector

On reservation of jobs in private sector, he said the UPA Government decided not to make it a legislation but Opposition and Left parties wanted it the other way. "This is perverse politics,'' he said, while assuring India Inc that the Government was not inclined to make it legislation. He justified amendment to the Patents Act saying it would benefit Indian scientists and entrepreneurs although it might hurt some sections of the industry.

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