'Reforms to be deepened, growth to be inclusive'
Hyderabad, May 6: Rolling out a new development agenda to the ADB, Finance Minister P Chidambaram today gave a solemn commitment to leaders from Asian countries assembled here that his government would spare no effort to deepen the reform process and put the country on a 8 to 10 per cent growth rate per annum.
''We are aware of the challenges before us. It will be our constant endeavor to address these challenges by deepening the reforms and to put the country on a trend growth rate of 8 to 10 per cent for eliminating poverty and achieving the Millennium Development Goals by 2015'' Mr Chidambaram said, in his address at the Business Session of the Asian Development Bank's 39th Annual General Meeting here.
Stressing the importance of foreign investments in Indian economy, Mr Chidambaram said as the country moves to a higher growth path there would be a need to supplement domestic resources with foreign investments.
He noted that the investment rate in India was around 30 per cent of GDP, which has largely being funded by domestic savings.
The implication of Mr Chidambaram's remark is that the savings and investment rate would need to be stepped up to put the Indian economy on a higher growth trajectory, which would of necessity entail higher doses of foreign investment.
''I believe that our economic reforms over the past 15 years, the strong role played by the private sector and rising domestic consumption have been the drivers of this growth,'' Mr Chidambaram said.
Mr Chidambaram, who is Governor for India, made a number of key suggestions to make the ADB a more effective instrument of development. He also gave his assessment of the performance and the future of the Asia-Pecific Region.
India's Finance Minister is also the Chairman of the Board of Governors. The mega event, at the sprawling Hyderabad International Convention Centre, is being attended by 39 Governors of the ADB and delegates from 66 countries.
The Finance Minister made out a strong case for re-adjustment of ADB's strategy from public sector lending to assistance through Public- Private Partnership (PPP) model.
Describing the ADB as a "truly worthy partner in development", Mr Chidambaram urged the Bank to follow an approach of consensus and inclusion.
"As ADB proceeds to finalise its strategy in the next few months, I hope it will also firm up the means for adequately funding the strategy and on more favourable terms. On the initiatives for monetary and financial cooperation and integration, I urge the Bank to follow an approach of consensus and inclusion rather than being exclusionary in its approach,'' he said.
Mr Chiadambaram suggested that ADB's loan charges should be restored to the lower levels prevailing before the year 2000. He said that the committment fee should not be treated as a source of income and it should either be eliminated or substantially reduced through improvements in operations and internal efficiency of the Bank.
The Finance Minister said the year promises to be a resilient for the world economy, despite rising oil prices, multiple natural disasters and tight commodity markets. "The growth for the world in general and Asia, in particular, has been robust." Mr Chidambaram said a large part of the increased pace of growth has been contributed by developing Asia. Mr Chidambaram, however, warned that there were several downside risks. These are higher energy prices and the possibility of sharp adjustments in exchange and interest rates, induced by widening payment imbalances.
Nevertheless, Mr Chidambaram expressed optimism regarding the outlook for growth in Asia and healthy demand for Asian output in the next few years.
''I understand that ADB has undertaken a review of its safeguards policies. ADB should look to adopting country systems tailored to local conditions, especially in countries that have institutional mechanisms anchored in democratic processes that recognise and adopt the principles of good governance,'' Mr Chdambaram added.