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Former Finance Minister to the Union Government, Mr.P.Chidambaram,
addressed members of the Houston Indian community on Saturday May 17th at the Post Oak Hotel Doubletree. The event was co-hosted by Asia Society Texas, the Indo-American Chamber of Commerce of Greater Houston and the Consulate General of India, Houston. The topic of the address was
"Partnering with India-the Emerging Economic Power." This talk was one of several given by Mr. Chidambaram last week during his visit to the United States.
AIMS India Foundation of Washington DC had organized his ten day tour in the United States during which time, he addressed gatherings of the Indian-American community in nine cities. AIMS India is a voluntary organization that was started by a handful of energetic, motivated, committed individuals in the Washington metro area with the goal of achieving a better society in India. They are an organization that seeks to bring about a socio-economic transformation in India through the collective efforts of hundreds of thousands of like-minded people and organizations spread wide across the globe. The Houston chapter of AIMS India, which was formed on Saturday encourages Indian-Americans and friends of India living in the Houston area to visit their website at www.aimsindia.net or write to info@aimsindia.net for more information.
Mr. Sam Kannappan, a pillar of the Houston Indian community, introduced Mr. Chidambaram to the audience. Mr.Chidambaram spoke about the twelve-year history of economic reforms in India and the steps India must take to emerge as a world economic power. Mr. Chidambaram stressed the importance of engaging the United States as an article of India's economic strategy and pointed out that developing countries will be affected first if the United States goes into a recession.
Chidambaram cited the current rates of economic growth and declared that if India is to climb out of poverty within the next twenty years, there must be consistent growth rates of eight percent. Since 1997 growth rates have fluctuated between 4.0% and 6.5%. He stressed three major areas of concern impeding India's progress in achieving annual growth of eight percent, namely the poor performance of the public sector, the fiscal deficit and lack of investment.
The public sector still has a heavy hand in many industries that Chidambaram feels should be privatized or opened for competition, but there is resistance to disinvestment airlines, railways, seaports and the steel industry. Many of the public sector industries are poorly managed and the government and public sector combined remains a net dis-saver. While Indian households save 22.5% of GDP and the private sector saves 4% of GDP, the public sector and government lose 2.5% of GDP per year.
The problem of the fiscal deficit can also be traced to the public sector. Chidambaram stated that government could only reduce expenditure by reducing its functions. Government should perform only those functions which government must perform. In many Indian states, the entire tax revenue goes to paying the salaries of government employees. These states are being forced to streamline and improve efficiency.
Investment in India remains at 23%, while investment in China is at 35%. In order for India to increase its investment, it must either increase domestic savings or open the window for Foreign Direct Investment (FDI). As Indian households are already saving 22.5% of GDP, there is little potential for an increase in domestic savings. Therefore, FDI must be increased. The infrastructure needs of India are so great, that they can support much higher investment levels.
Mr. Chidambaram stressed the need to engage the United States as a potential investor. India is the most lucrative country for investment. In the energy sector, India will need investment on a long term basis. India needs an increase of 10,000 MW of energy every three years for the next 15 years. He was illustrating the potential of India as an investment location. Chidambaram emphasized that the business of political leaders is to promote trade and investment.
Chidambaram then drew the audience's attention to a number of non-economic problems that are plaguing India. These issues also stand in the way of India's economic progress. Among these are gender, children's and health issues.
He closed his address by boldly stating that India's economy will become stronger and stronger given the favorable trend that is emerging both within and outside India. Already India has the fourth largest economy in the world, and he sees the potential for it to occupy the third slot. India's human resources are among the best in the world, and he happily noted that India had enough human resources to run not only India, but to assist in the progress of so many other nations. He then reiterated that India should forge a close relationship with the United States, that trade and investment as well as the exchange of ideas between the two nations will strengthen this relationship.
Mr. Chidambaram's address was followed by a number of questions
from members of the audience, which he answered articulately.
In response to a question, he urged to the NRI's to invest in
India. He exemplified Infosys and how a group of 4 engineers returned
to India to form a most profitable and successful company. He
said the road in India would certainly be a "bumpy ride", but
it would be more fun and interesting. He had also addressed
the Houston Tamil community on Saturday afternoon at Meenakshi
Amman temple located at Pearland, Texas.
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