In the backdrop of demands for opening multi-brand retail for FDI and liberalising the regime for other sectors like defence, Dr Manmohan Singh admitted there was a need for “favourable” environment for fund flow from abroad.

“I think we need to strengthen the resolve to create favourable environment for larger flow of funds from abroad”, he said.

Addressing editors of electronic media here, he, however added the government’s policies could not be blamed for drop in FDI as the current international scenario was prompting foreign funds to move out from emerging markets.

“It is not our mistake (downflow in FDI). The international situation is such that funds are moving out of emerging markets. We are today functioning in an environment where what happens outside affects us,” said Mr Singh. “Therefore it is not easy to say that what happens to fund flow is entirely a function of our policy,” he added.

The Prime Minister also stated that policies followed by the developed economies also played a part in foreign investments coming into India.

During April-December of the current fiscal, FDI inflows declined by 23.14 per cent to $16.03 billion over the year ago period. The Government has taken several steps like initiating discussions on opening multi-brand retail for FDI.

Corporate debt market

Dr Singh said India needs to develop a corporate debt market to meet the projected investment of $1 trillion required to sustain the country’s economic growth rate in the 12th Five-Year Plan (2012-2017).

A corporate debt market enables private industry to raise funds through debt instruments and channelise these into specific sectors, including infrastructure.

“We must, I think, create a viable corporate debt market. I think that is the direction in which we must move,” Singh said during his meeting with editors of the electronic media here.

Discussions are going on to create an infrastructure development fund and Finance Minister Mr Pranab Mukherjee may make some announcements in this direction, he said. “I think some discussions are going on... and most probably, I think, Finance Minister will outline something in that direction,” he added.

Poor infrastructure, including bad roads and power shortage, are affecting the country’s growth and flow of foreign direct investment (FDI) in important areas.

The government has projected an investment of $1 trillion in the country’s infrastructure sector in the 12th Five-Year Plan, of which it expects 50 per cent to come from the private sector.

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