In the recently released report "World Investment Prospects to 2011" by Economist Intelligence Unit (EIU) and Columbia Program on International Investment (CPII), it has been clearly mentioned that India has not realized its true FDI potential despite attracting massive FDI inflow.
The report says that India may not achieve its current FDI target of USD25 billion in 2007-08 owing to political resistance to privatization, inflexible labor laws and poor infrastructure. It is well documented that India needs foreign capital for investment and slow growth in foreign inflows may retard the GDP growth. Coincidentally, Goldman Sachs stated in its global economics paper no. 152 "India's Rising Growth Potential" that India would need to boost its investment rate by another 16% of GDP to achieve and sustain a growth rate of 10%.
During the last few years, government has been relatively liberal and outward looking in framing the policies. It is time to give the growth a further push by framing the policies more conducive for foreign investment.
Sunday, September 30, 2007
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