The Hindu Business Line : `Infrastructure vital for luring investments'

(From right) Mr Stephen Roach, Managing Director & Chief Economist, Morgan Stanley, Mr Nimesh N. Kampani, CMD, JM Morgan Stanley Pvt Ltd, and Mr Sunil Kant Munjal, Vice-President, CII, at a meeting on `Global Rebalancing: Day of Reckoning' in the Capital on Monday. — Ramesh Sharma

New Delhi , March 29

INDIA has to overcome the infrastructural limitations to attract more investments from the developed countries into the manufacturing sector.

Also, the approach to reforms which is "on again and off again" has to change to gain confidence, said Mr Stephen S. Roach, Managing Director and Chief Economist, Morgan Stanley, here.

Speaking at an industry gathering organised by the Confederation of Indian Industry (CII) here, Mr Roach said that if India could continue to maintain its growth rate, then investors would gain confidence in the economy. "We have seen the East Asian growth. But that went up in smoke. India needs to dispel such fears," he said.

Commenting on the recent debates on offshoring of US jobs, particularly to India, Mr Roach said that trade protectionism is a by-product of a potentially lethal interplay between politics and the economics of jobless recoveries in the developed world.

Commenting on global developments, he said that the US-centric global growth is no longer sustainable and America's massive current account deficit speaks of a world that needs to find a new recipe for growth. The world would benefit from an orderly depreciation of the dollar. For the US, a weaker currency would shift the mix of economic growth from domestic demand to exports.

According to Mr Roach, the world equilibrium is unbalanced and requires a shift in relative prices in order to establish a new and more sustainable equilibrium. The dollar — the world's most important relative price — had an important role to play and added that global rebalancing and dollar depreciation would go hand in hand and stressed that the world needs a weaker dollar in order to uncover a new and sustainable paradigm of balanced growth.

While global rebalancing can alleviate unsustainable pressures in today's world economy, it is also a breeding ground for a new set of tensions — chief among them being "jobless recoveries" in the developed world, he said.

Speaking on the occasion, Mr N.K. Singh, Member, Planning Commission, said that outsourcing was important for India but it would not be enough to solve India's employment problem.

The need of the hour was a growth model, which would support economic growth along with employment growth.

It is also important to address the medium-term problem arising out of the variants in demographic profile, Mr Singh said.

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