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Foreign direct investment of $ 10 bn forecast

Finance Secretary Montek Singh Ahluwalia says India is confident of achieving a Foreign Direct Investment inflow level of $ 10 billion in two years.

''Today, the FDI inflow, measured as pure equity, amounts to five billion dollars. With the opening of the infrastructure sector, large amounts of FDI is expected to flow into the country and we are confident it will touch $ 10 billion in two years,'' Ahluwalia said at the opening ceremony of the International Fiscal Association congress in New Delhi on Sunday night.

The FDI level, he said, has increased from $ 150 million a few years ago to $ 5 billion this year.

''Though this would seem to be a good increase, it is not large compared to inflows in other Asian nations. Our effort will be to bring it to the levels in other Asian countries," the finance secretary said.

Ahluwalia said the government is willing to phase out all quantitative restrictions on the remaining items of import, including agriculture and consumer goods within six years. ''We have eliminated QRs on trade over a wide range of industry. The government has made it clear it will eliminate QRs totally in six years,'' he said.

The finance secretary said the reforms process undertaken in India was unique given the democratic framework in the country. ''It is really difficult to get everyone on our side in a democracy, but we have managed to achieve a consensus with regard to reforms," he said.

The country, he said, is trying to dismantle the protective regime in the country in a phased manner. A major area of economic reforms is the financial sector reforms.

''In the banking sector, we are halfway through. The banking system is going through a process of internal restructuring, with non-performing assets of almost all the banks going down and performance improving.''

Infrastructure, according to Ahluwalia, is one area which needs large investments.

''We need major investments in infrastructure if we are to achieve the growth levels envisaged and be one of the global economies,'' he said, adding that the government, on its part, was trying to ensure that suitable steps are taken to get the required funds for this sector.

''When the bottlenecks in the legal structure are taken care of and a regulatory framework is well established," Ahluwalia said, "there will be large inflows of foreign investment in the infrastructure sector.''

UNI