Kamal Nath confident of $30 billion FDI despite slowdown

Continuing to sound upbeat in the face of the recession, commerce and industries minister Kamal Nath said he expected total foreign direct investment in the current financial year to reach $30 billion.

Confident of the resilience of the Indian economy, Nath today said despite the downturn and the massive de-leveraging seen across the world, India would continue to attract foreign capital.

Speaking at the annual partnership summit organised by the Confederation of Indian Industry (CII) in New Delhi, Nath hinted at further stimulus packages for industry. He said the government would continue to add adequate funds to the economy and provide stimulus to various industries as and when needed.

The commerce department had been planning a second stimulus package for the export sector for some time, Nath said, adding that he would be meeting various export promotion councils and the Federation of Indian Export Organisations (FIEO) on January 21 to discuss their concerns and needs.

He said that the government had already announced two stimulus packages and earmarked money for long-term infrastructure projects to ensure that the global economic crisis does not impact India in a serious manner.

Nath said he hoped that in the forthcoming credit policy review, RBI would infuse liquidity to lower interest rates. Since October 2008, RBI has already infused around Rs 320,000 crore to ease the liquidity crunch in the banking system. Since October 2008, interest rates have fallen by up to 1.5 percentage points. Nath said this had helped revive demand in the domestic market.

As inflation has also come down to 5.24 per cent from 11 per cent in October, Nath said there is scope to reduce interest rates further by infusing more liquidity. "RBI will certainly consider this and devise policy for injection of liquidity into the economy,'' Nath said.

He said the momentum to attract FDI would continue. For achieving the $30 billion target, the country would need over $11 billion FDI in the last three months of the fiscal. Total FDI during April-December 2008 worked out to be $18.7 billion, Nath said, adding it was double compared with the same period last year. In 2007-08, India received $25 billion FDI.

Commenting on the dormant status of the Doha development round of the World Trade Organisation (WTO) negotiations, Nath once again brought up the issue of the massive farm subsidies in the US and other developed nations and said, ''We are looking for an agreement that adds a notch or two to our growth rate, and doesn't temper it.''

Nath said the government was worried about job losses taking place in export-oriented sectors, and would take steps to minimise these. Speaking to the media at the CII meet, the minister said the job-loss situation will be analysed in the meeting the commerce department was holding today with various export groups and industry sectors.

According to estimates made by the Federation of Indian Export Organisations (FIEO), up to 10 million jobs could be lost in the export sector by March-end if specific steps to bail out exporters are not taken. India's exports have registered a negative growth in the last three months of calendar year 2008, mainly due to a credit squeeze and drying up of orders in the western markets.