New Delhi, Sep 19: Saying that time was of essence, US Ambassador David C Mulford has enjoined upon India to take the "last steps" to operationalise the civil nuclear deal with Washington, including completing the IAEA-India Safeguards Agreement and securing the Nuclear Suppliers Group rule change.
These steps will permit India's nuclear initiative to be "global in its scope", Mr Mulford said last night in his address at the Fourth Indo-US Economic Summit. The event was organised by the Indo-American Chambers of Commerce.
Planning Commission Deputy Chairman Montek Singh Ahluwalia also addressed the gathering.
''Finally, the US Congress must vote once more on the 123 Agreement, an action best accomplished by this (Bush) Administration in the life of this Congress'', Mr Mulford said.
''The bottom line here is that when these final steps are taken, India's isolation in the global civil nuclear field will end. This will enable India to launch a new large scale industry of its own and pioneer a new era to meet its energy needs that will ultimately benefit all its people,'' he said.
Pointing out that the Bush Administration and the UPA government have overcome past differences and were charting a new course for the future, Mr Mulford said "this new course moves us from 123 to what I call 456."
Touching upon this new concept, Mr Mulford said "We are engaging with India on virtualy every important front, from defence and space co-operation to critical transnational issues such as counterterrorism, health, education and climate change."
The Ambassador then went to discuss his vision on economic relationship between the two democracies.
Mr Mulford said India's reforms have gradually worked to provide a "critical mass of energy," which was permitting stronger and more sustainable growth. "This is a significant national achievement shared by a number of governments and cutting across party political lines. It has truly been a national effort," he said.
The Ambassador made out a case for further liberalisation of India's banking and financial markets.
He also suggested the need for a paradigm shift in the economic and commercial use of water."This is an area where reforms that establish a price driven regulatory regime would have major economic benefits as well as positive social policy implications." "Such bold thinking if translated into action will help reshape Indian agriculture so that potable and affordable water is more accessible to village households and small farmers, improving their lives and livelihoods", Mr Mulford said.
Citing of the stark differences among India's states: Bihar's per capita income is roughly 160 dollars, while Maharashtra's is almost 900 dollars, he said it was no coincidence that Bihar has attracted less than one percent of foreign investment in the past decade, while Maharashtra alone has received nearly 25 per cent.
"Good governance matters and the right policies that attract and hold private investment will be critical to raising more of India's people out of poverty and providing more diversified, more secure livelihoods," he said.
Mr Mulford said a sector that can make a positive impact on India's poor -- especially in rural areas -- is organised retail.
In this regard, he noted that leading Indian companies, including Reliance, Bharti, and ITC, plan to invest billions of dollars in stores and infrastructure to get fresh produce directly from the farm to the market at "markedly more competitive prices." "This level and diversity of investment is far beyond the means of Government alone to provide and, if forthcoming, will bring about significant improvements in both job opportunities and quality of life in rural areas".
The quoted a study which found that Indian farmers at present receive only 35 to 40 per cent of the retail price of their goods, compared to 65 per cent in countries with highly organised retail.
He said higher price realisations have the potential to double farm income in India. "We are beginning to see across the country that farmers welcome organised retailers and the higher prices they offer. Ultimately, organised retail has the potential-- through increased competition and the efficient allocation of rising investment flows-- to increase economic gains to both farmers and consumers and to provide jobs to rural workers." He noted that India Inc's engagement with the world has deepened significantly since 2000, with trade and investment flows in and out of India at historic highs and rising rapidly.
In this regard, Mr Mulford said the increased flow of investment in and out of India was especially significant. India's global FDI has been surging - tripling in the first half of this year to roughly 11 billion dollars- on the heels of last year's record 16 billion dollars for the entire year.
In this regard, Mr Mulford noted that these numbers for nearly a decade stayed around three billion dollars annually.
He said new areas of investment have come up in the wake of successful reforms, including financial service companies, construction (including highways), telecom and transportation.
"FDI from the U.S. has now begun to fulfill expectations.
Although the U.S. has been India's largest investor for many years, flows hovered for years around a modest average of 400 million dollars annually. Now, American investment is growing by 50 per cent per year - to nearly 900 million dollars in FY07. If we could track investments made through Mauritius, this number would no doubt be considerably higher", Mr Mulford said.
Last year saw the convergence of institutional and direct investment, he noted in this regard, he said that historically, portfolio investment has vastly outstripped FDI, but in FY07, FDI beat Foreign Institutional Investment, "reflecting investors' growing confidence in India's long-term future, rather than the attractions of current high valuations." Mr Mulford said just as powerful was the surge in outward FDI, putting India on the map as a source, not just a destination, for investment.
Demonstrating the two way nature of Indo-U.S. economic engagement, he said the U.S. has long been one of the largest recipients of Indian investment, receiving roughly one-fifth of India's investments abroad. Indian investment in the U.S. is now spreading from an IT focus into other sectors, including pharmaceuticals and manufacturing, such as the Mahindras' tractor factories in the U.S.
"Certainly, these multiple facets of India's deeper engagement with the global economy have helped propel India's growth rate to 9 per cent levels, a feat that should be repeated this year, again helping to raise people out of poverty and bringing more into India's middle class", Mr Mulford said.
Dr Ahluwalia said corruption was an issue that needs to be addressed, but added that the passing of Right to Information Act has imporved the situation. He, however, said more needs to be done in this regard. The spoke eloquently about the ever growing closer engagement between Indis and the United States and in this context said the meeting of CEO's Forum is scheduled to be held soon in that country.
Besides, 'India Week' is being celebrated in the United States.
The Plan Panel Deputy Chief also spoke about the growing tie-ups among the business communities of the two countries, including those between Bollywood and Hollywood.
Dr Ahluwalia said the CEO's Forum will be addressed by Finance Minister P Chidambaram, Commerce and Industry Minister Kamal Nath as well as by himself, reflecting the high priority that India gives to the business content of the engagement.
He said India plans to step up spending on infrastructure from less than five per cent of GDP to more than nine per cent.
Dr Ahluwalia said there were two areas of concern regarding the development of the Indian economy-- soft infrastructure, which relates to areas like education, and hard infrastructure entailing the development of ports, airports and roads.
He said efforts were on to provide larger allocations to both these areas.
Dr Ahluwalia said as the government does not have adequate resources to spend, it will increasingly rely upon the Public-Private Partnership model to fill the gap.