Jaipur, Mar 19: Creation of "sectoral blocks" for foreign direct investment (FDI) in India may prove to be counter-productive, according to Babu L Lakshman, president of the Associated Chambers of Commerce and Industry of India (Assocham)."We need FDIs for the country's economic uplift and the government should lay emphasis on how to attract such investments," the Assocham president told The Financial Express on his visit to the city.
Lakshman said the new government, headed by Atal Behari Vajpayee, should dispel certain misgivings of the investors with regard to the continuance of the reforms process. Due to the lingering confusion in the matter, the economic progress had been considerably halted.
He expressed hope that the Vajpayee regime would not depart from the declared and committed economic policies so that the confidence among the foreign institutional investors was not shattered. In his view, the domestic industry also needed the desired boost.
As the country's economic fundamentals werestrong, the right policies and strong leadership could make a big difference. In his view, the economy should not be linked with politics and all possible steps should be taken to remove the demand recession that had gripped the country's economy.
Lakshman said no more time should be lost in effecting reforms in the financial sector. More autonomy should be given to banks with by opening the insurance sector to the private sector.
On the continued sluggishness in the capital market, the Assocham chief said the first thing to be done should be to restore the confidence of the investors.
Big corporates should enter the market with attractive offerings. According to him, companies should continue to have freedom in fixing the premium on issues.
The market should learn what is good and what is before any decision on investment is made, he added.
Lakshman said the government had totally misread the situation that funds would come in the infrastructure sector from the corporate. In sectors such as roads,ports and power the investment should be led by the government. In the power sector some regulatory mechanism has got to be present.
The government should give some relief in the excise duties to give a boost to the economy. The existing unutilised capacity in the industry should be put to use, he said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
