Friday, May 16, 2008

India overtakes US in Foreign Investments

In a record of sorts, India has for the first time taken over US as the second hottest destination for foreign investment. China still leads as the first one.

This record is very good. The last 3 years Chidambaram has been clearing a lot of pending FDI proposals. Now, Japan, US, Australia, France, Singapore, China have become major partners of india in trade.

It is very easy to break this record, but the government - be it Congress or BJP must keep it going and concentrate on Disinvestment - the only source of getting more money from within country and in turn helping PSU's get better management and skilled labour. It is no longer a fallacy or dream - but a proven record that if our PSU are well managed, it can overtake global companies.

Of late, Disinvestment - an idea mooted by Congress in 1996 (and which was very actively carried forward by Arun Shourie in BJP led government) has come in the limelight. In fact Arun Shourie must be given enough credit to give life to various proposals given by CII, ASSCOHAM, FICCI. He implemented them with audacity despite stiff opposition. Because of Left party pressure, this Government is cautiously taking steps in Disinvestment.

Congrats Kamal Nath and Chidambaram, for you have kept the spirit of reforms still going. Yet the pace is slow.

Now China as of 2007 has $56 billion dollar FDI while India has $20 billion. It is a record because 3.8 billion dollars were got in just one month and as compared to last year which was 5.5$ billion...It is a jump of 275%. As of 2008, India has $26 billion while China is in 60's. However what industry experts say is India is far better in the larger run because India has huge enterprenueral spirit while China leads in manufacturing spirit. China is not concentrating on technology upgradation while India is slowly doing this and will help in the long run. Also, while China concentrates on using FDI to boost its exports, India is using to develop larger corporations and business houses via mergers and acquisitions. I feel the latter would easily help reach the China way, although our industry must grow by leaps and bounds.

Here's the article confirming this.
Another article

Chidambaram has actually hiked FDI cap to 74% in telecom. Also he has increased the cap in insurance, health, 100% in real estate and construction, oil refineries (so far FDI in this sector was absent and was a major battle issue during NDA regime), titanium mining, 37 proposals in Broadcasting and print media, commodity exchanges and credit information companies.

There are 2 major sources of overtaking China in terms of FDI - FDI in retail and Disinvestment of sick PSU's. While the former is a contentious issue, the latter is an easier task to do. Apart from this infrastructure and power reforms must be given lot of importance and it is here FDI will help. Next on the cards is FDI in agro processing which will benefit farmers a lot.

Please vote out the Left is the only prayer I have. It doesn't matter w.r.t Economic reforms if there is a Congress led majority or BJP led NDA. The Left should not have a say in Government.

So, as of now India is on an upbeat as far as economic reforms are concerned!!!

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