Finance Minister: India Will Protect Foreign Investment

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Apr. 19 – Finance Minister P Chidambaram has said that India has all the qualities that guarantee foreign investment is protected. The Minister – tipped to become the next PM – is currently on a tour of North America to promote investment in India.

Chidambaram affirmed that foreign investors need to be assured by emerging economies that their investments will be fully protected and not negatively impacted by the ‘whims’ of governments.

“Emerging markets have to increase the comfort level of international investors, to improve their sense that their capital is well protected,” Chidambaram said. “After all, why would they invest over the long term if their capital can be expropriated by a change in laws or by the whims of the government? The best guarantor of investment protection is a stable and democratic political structure, a belief in the rule of law, and a transparent and independent legal system. India has all three.”

“We constantly hear of moves in industrial countries to engage in financial protectionism, to keep savings at home in order to finance overextended industrial country governments. Any move in this direction would be terribly misguided,” Chidambaram further stated.

Chidambaram also highlighted that international multilateral institutions need to be restructured to provide for the shift in economic power towards emerging markets.

“Global multilateral organizations were set up to deal with a set of problems based on an agenda and a framework set by the industrial countries,” he said. “The problems have changed, the players are different, and their relative importance has altered significantly, but the organizations, the agenda setting, and the lens through which solutions are devised have not changed enough.”

“Denying emerging markets real power will be very shortsighted,” he stated.

Chidambaram concluded that inclusive growth needs to be an imperative for India.

“In my view, a good, decent job is the best form of inclusion. So, India’s efforts have been focused on trying to enable the poor to obtain better nutrition and health, education and skills, and financing, that will allow them to secure good livelihoods. Inclusive growth will enable India to have a fairer, and in many ways more stable, society.”

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