New Delhi: For Kamal Nath, commerce minister in the outgoing cabinet, the past five years have been spent in aggressively articulating India’s stance in global trade talks, even as he pushed for greater liberalization on foreign direct investment (FDI) and special economic zones on the home front. He spoke on his views on India’s growth and its FDI policy. Edited excerpts:
The new government is going to be formed in the midst of a global as well as domestic slowdown. What is the plan of the Congress party and the United Progressive Alliance (UPA)?
With the international markets in trouble with global recession, we have to look at it in a very India-specific manner by creating a domestic stimulus encompassing rural India…because demand in rural India can be phenomenal. And that will then drive our manufacturing sector.
Road map: Nath says the UPA plans to create an investment-driven model to achieve an economy growth rate of 8% this fiscal year. Ramesh Pathania / Mint
We have to also look at construction…such as mass housing and cheap housing.The idea is to create an investment-driven model so that (the economy) can go back to a good growth trajectory of 8%.
Do you mean a growth rate of 8% this fiscal?
Yes, this fiscal.
When will this stimulus package be announced? Will it be with the budget? The Congress manifesto says the budget will be announced in 45 days of government formation.
We have to look at all facets of the economy. We have to see that the banks are lending...even if we have to incetivize them because the cost of money is very important. But India is in a very good position.
In the US and Europe, we are seeing the government lending to banks. In India, it’s the other way round. So this speaks very well of our financial structural system.
What are the key sectors?
We have to look at the manufacturing sector all across. One job in manufacturing creates three in services. There are sectors which are hit by the global recession like gems, jewellery and textiles. These sectors have to adopt and adapt and the government must play an enabling role in them being able to adopt and adapt.
Commerce secretary G.K. Pillai said a few days ago that there would be no more stimulus for exports and that is a troubled sector.
We can’t provide stimulus packages for Europe and the US. They have to find their own stimulus packages. But we can make our exporters competitive. We can see that their transaction costs are reduced and all the levies and duties are fully reimbursed. That will give them a slight edge.
The Left is no longer with you. Can we expect more rationalization and liberalization of the FDI policy?
We already have a liberalized regime. If anything is required, we can streamline it. India still remains a very good parking lot for investment. Foreign investment has not dried up. It has become more competitive. There are more competing destinations. To ensure India remains a good destination, and if there are any roadblocks, we’ll try and correct them. But for that we need to sit down with investors.
What about the retail sector? Will you open it to FDI?
Well, not for the time being. We’ve done some studies and it still requires more work.
Which other sectors will you look at for rationalizing or liberalizing?
There are some procedural issues which sometimes create roadblocks. Most of our sectors are open. So it’s not a question of opening but streamlining.
There is still a lot of ambiguity around the recently notified Press Notes two, three and four. The Reserve Bank of India and the department of economic affairs have expressed their concerns.
Well, it’s a cabinet decision. It’s not what a ministry feels.