Modi urges billionaires to invest for state as world economy wobbles
The International Monetary Fund considers India's economy a rare bright spot among emerging markets.
Prime Minister Narendra Modi called bankers and billionaires to his residence on Tuesday to brainstorm on how India can manage global economic turbulence, including opportunities for Asia's third-largest economy in China's market and growth woes.
The morning meeting in New Delhi was attended by tycoons including India's richest man, Mukesh Ambani, Finance Minister Arun Jaitley, central bank governor Raghuram Rajan, economists and state and private bank chiefs.
At the gathering, industry chamber ASSOCHAM told Modi policy makers needed to act fast to "bullet proof" India from global jitters - calling for a deep cut in interest rates and new duties to stop dumping of Chinese products such as steel.
India's macroeconomic situation has improved considerably since the 'taper tantrum' of 2013, not least thanks to lower prices for the commodities it imports. Then, inflation, for example, was at double digits - it has since halved.
The International Monetary Fund considers India's economy a rare bright spot among emerging markets and Modi sees a chance to attract more foreign investment as money flows out of China.
But it will not be easy to turn China's pain into India's gain. Investors and corporates increasingly worry that Modi has not moved fast enough since taking office. Annual growth slowed to seven per cent in the June quarter.
"Mr Modi ran a successful state. He campaigned for two years saying he knew what to do. He has been there 15 months with the largest majority since independence yet little has happened," US investor Jim Rogers told Reuters Trading India on Tuesday.
Rogers recently announced he had sold his India investments.
After farmer protests forced the government to drop a major land reform and opposition parties delayed a growth-boosting tax overhaul, expectations are growing that Modi will soon unveil new measures to make it easier for foreign money to enter India.
The government predicts India's economy will grow at eight per cent or more in 2015/16, prodded by government spending. Yet private investment has been slow to pick up, with banks and businesses hobbled by bad debts and high lending rates.
Modi urged India's business leaders to invest for the good of the nation after seeking fresh ideas from billionaires, bankers and bureaucrats as the country's stocks and currency slide.
"He suggested to industry that they should really contribute to nation-building to invest in India," Deputy Finance Minister Jayant Sinha told reporters on Tuesday, referring to Modi. The prime minister called on everyone to work together and focus on job creation to get India through a turbulent period in the global economy, Sinha said.
Modi has struggled to pass key economic proposals including a goods-and-services tax even as China's slowdown threatens to drag down global growth. India's stocks and currency have been among the worst hit in Asia since China devalued the yuan last month.
Some 27 people spoke at the three-hour meeting, Finance Minister Arun Jaitley told reporters afterward. Many spoke about the need for lower borrowing costs, he said.
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