India seeks more FDI under reform

Indian Prime Minister Manmohan Singh yesterday indicated his government will go for financial reforms in order to attract more foreign direct investment (FDI). Addressing the India Economic Summit here, he said though the global financial crisis did not affect Indian banks or Indian financial market directly, it drew attention to the need to strengthen the financial system in various ways as the country and to ensure that the system can provide the money needed for development, especially for infrastructure development. "We need to develop long-term debt markets and to deepen corporate bond markets. This in turn calls for a strong insurance and pension sub-sectors. Some of the reforms needed, especially in insurance, involve legislative changes," he said, adding that efforts are on to build a political consensus needed for these changes in laws. Singh said the futures markets needed to be improved for better price discovery and regulation and there was a need to remove institutional hurdles to facilitate better intermediation. Singh pointed out that India has done relatively well to counter the effects of global economic crisis but needs to do more to attract investments to ensure a high growth rate. He said India's FDI policy has been greatly liberalised and FDI has been freely allowed in more and more areas under the automatic route and now covers a number of sectors in agro- processing, nearly all areas of industry and also services. Singh said India has been able to face the global economic downturn better than most other countries in the world as its economy grew at a respectable rate of 6.7 percent in 2008-09. He said despite a slowdown in agriculture due to inadequate monsoon the growth is expected to be around 6.5 percent.