The Hindu Business Line : `US cos recognise value of outsourcing'

AT the end of the day at a press interaction this correspondent asked the Finance Minister, Mr P. Chidambaram, what he saw different at this Investment Forum meeting that he had not seen or witnessed in similar settings before.

His reply: "What I saw today was interest mixed with curiosity in the policies of the new Government," that the beginning was already laid out by the Prime Minister, Dr Manmohan Singh, at the New York Stock Exchange last month and in his raising the bar that India needed $150 billion over a period of time to take care of the challenges in the realm of infrastructure.

``My task", the Finance Minister continued "is at a more practical level — inviting them to invest in India."

If the first day of the two-day proceedings are anything to go by it was indeed a mixture of interest and curiosity, for the Finance Minister fielded questions not only on reforms but also on the political dispensation in New Delhi, the role of the Left parties in India, the stance on privatisation, how the Government was going to tackle inflation in the context of rising oil prices, outsourcing and the attitude of the new Government on allowing foreign investments in the print media, real estate and retail.

In the midst of all this, Mr Chidambaram took time to reflect on the meaning of the recent elections in India.

"No one in India, not even the poorest envies the prosperity that has come to our towns...no one questions the wisdom of an open economy. No one questions the virtue of a competitive economy. No one questions the rationale of liberalisation and globalisation and engaging the rest of the world," the Minister remarked making the point that the poorer sections of the society only asked Governments to address the basic needs such as drinking water, sanitation, schools, health centres, roads, electricity and so on.

"That's our responsibility as a Government. We will commit public funds and we will make public investments to take care of the needs of rural India, especially the farmers," he said.

On the question of the role of the Left parties, the Minister argued that the concerns such as food security, jobs and providing basic needs are not "exclusive" to the Left and on this the Congress Party and the Left have no disagreement "Yes, there are some differences on how we open up and how we pace the reforms. I don't think the Left has any conscientious objection to foreign funds or foreign direct investment or FII. All that they say is FDI must bring in technology, capital and must come into the critical sectors of the Indian economy... " Mr Chidambaram remarked. "Working a coalition is a learning on the job process."

On the subject of allowing foreign investment in the print media, Mr Chidambaram argued that there is "no uniform practice worldwide on print. Most countries have very restrictive policies on print."

It was pointed out that a group of Ministers was being constituted to look at this issue and, therefore, one would have to await that report. The Finance Minister was asked about the impact of rising oil prices to the Indian economy. "We are very unhappy," he replied going on to say that the rising prices are not justified and are not sustainable in the long run.

The high prices are hurting countries like India and likely to retard growth to some extent. For every $5 increase in crude oil prices, it pushed up inflation by 1.4 per cent and thus far this factor has already contributed to 2.8 to 3 per cent to the inflation. But the response to this would have to be by way of "measured steps" on both the fiscal and monetary side, he noted.

On the subject of outsourcing, he pointed out: "Most businessmen recognise the value of outsourcing. For every dollar that is outsourced by US business, US business insources at least $5-$10 from India... Business understands very well that outsourcing brings in insourcing and that it's outsourcing that keeps US businesses competitive. Nobody questioned the wisdom of outsourcing."