Stating that the Indian economy, which he likened to an elephant, had "started to dance", finance minister Palaniappan Chidambaram said on Thursday that foreign direct investment would play an important role in speeding up India’s economic growth.
Mr Chidambaram, in his address to nearly 350 delegates, including bankers, on the second day of the 39th annual meeting of the Asian Development Bank here, said that higher FDI inflows would not only help in "stepping up the investment rate, but in also enabling transfer of technologies and the globalisation of Indian firms".
"Our FDI policy, like any other policy, is an evolving policy. Investor confidence in India is at an all-time high today. The World Investment Report 2005 has ranked India as the second most attractive investment destination among transnational corporations," he said to a round of applause at the "India Day" at the meeting.
The finance minister said the reason for the interest in India by foreign investors was because the country’s gross domestic product growth rate had been in the range of 7-8 per cent. "In the global context, India’s growth performance of the last decade and a half ranks among the top six in the world growth league 1 along with China, Korea, Thailand, Singapore and Vietnam. In purchasing power parity terms, the growth puts us among the top four in the world," he said.
Mr Chidambaram said the household savings rate in India has moved to a higher growth trajectory. "In the late 1990s, savings of Indian households were pegged at 17 per cent of GDP, but by the beginning of 2006, they were in excess of 29 per cent."
According to the finance minister, India is set to witness a second wave of offshoring in the manufacturing sector. "Till a couple of years ago, our manufacturing sector contributed less than 20 per cent of GDP. Now, however, the industrial sector contributes 25 per cent of GDP," he said.
"The second and much bigger wave of manufacturing offshoring is yet to come. The first wave consisted mostly of labour-intensive items. The second wave, just beginning, could reach $1.6 trillion annually, will consist of skill-intensive manufacturing," he said.
Referring to exports, he said that when economic reforms had started, India’s exports accounted for less than six per cent of GDP. But by the beginning of 2006, they accounted for more than 13 per cent. "India’s goods and service exports have up nearly eight times from $25 billion in 1991 to nearly $200 billion in early 2006," he said.
Mr Chidambaram, in his address to nearly 350 delegates, including bankers, on the second day of the 39th annual meeting of the Asian Development Bank here, said that higher FDI inflows would not only help in "stepping up the investment rate, but in also enabling transfer of technologies and the globalisation of Indian firms".
"Our FDI policy, like any other policy, is an evolving policy. Investor confidence in India is at an all-time high today. The World Investment Report 2005 has ranked India as the second most attractive investment destination among transnational corporations," he said to a round of applause at the "India Day" at the meeting.
The finance minister said the reason for the interest in India by foreign investors was because the country’s gross domestic product growth rate had been in the range of 7-8 per cent. "In the global context, India’s growth performance of the last decade and a half ranks among the top six in the world growth league 1 along with China, Korea, Thailand, Singapore and Vietnam. In purchasing power parity terms, the growth puts us among the top four in the world," he said.
Mr Chidambaram said the household savings rate in India has moved to a higher growth trajectory. "In the late 1990s, savings of Indian households were pegged at 17 per cent of GDP, but by the beginning of 2006, they were in excess of 29 per cent."
According to the finance minister, India is set to witness a second wave of offshoring in the manufacturing sector. "Till a couple of years ago, our manufacturing sector contributed less than 20 per cent of GDP. Now, however, the industrial sector contributes 25 per cent of GDP," he said.
"The second and much bigger wave of manufacturing offshoring is yet to come. The first wave consisted mostly of labour-intensive items. The second wave, just beginning, could reach $1.6 trillion annually, will consist of skill-intensive manufacturing," he said.
Referring to exports, he said that when economic reforms had started, India’s exports accounted for less than six per cent of GDP. But by the beginning of 2006, they accounted for more than 13 per cent. "India’s goods and service exports have up nearly eight times from $25 billion in 1991 to nearly $200 billion in early 2006," he said.