The Hindu Business Line : Chidambaram urges NRIs to expand investment horizon

THE UNION Finance Minister, Mr P. Chidambaram, and the Tata group Chairman, Mr Ratan Tata, at the Pravasi Bharatiya Divas 2007 in the Capital on Tuesday. — Ramesh Sharma

New Delhi , Jan. 9

The Finance Minister, Mr P. Chidambaram, on Tuesday urged the non-resident Indian community to extend its investment horizon in India from the current average of three years to 10 years.

He said that new financial instruments were being designed to attract and receive long-term NRI money into the country. The Finance Minister used the occasion of the Pravasi Bharatiya Divas 2007 to seek a complementary shift in the Indian Diaspora's attitude on the similar lines as that of Indian industry.

He pointed out that Indian businesses no longer limit their horizon to 2-3 years, but were charting plans for 10-15 years and even moving their footprints into many countries of the world.

"Our outlook in India has changed dramatically in the last three years. The Indian industry does not live from quarter to quarter anymore. It already has a vision for next 10-15 years. If you share that vision, which I share, there is no reason why you should not extend your horizon," Mr Chidambaram said.

While the annual incremental accretion in NRI deposits in India was about $2-3 billion, the total outstanding NRI deposits stood at about $35 billion and the average tenor of these deposits was about three years.

On infrastructure, the Finance Minister said that India required about $320 billion over the next five years for improving its infrastructure and that most of this resource requirement would have to be met from within the country.

He, however, said $20-25 billion would have to come from abroad. "I will be happy if significant part of this comes from NRIs to help improve India's infrastructure," Mr Chidambaram said.

He said that investments and knowledge are two important instruments that are needed to sustain the current growth. He indicated that the knowledge levels among NRIs are more valuable than the resources that they possess.

The Finance Minister highlighted that India still does not have an institutional mechanism to receive knowledge and intermediate them to industry. "We need a board on the lines of the Foreign Investment Promotion Board to receive knowledge and use them for economic development. I propose to examine the idea of developing an institutional mechanism that would help the government to receive knowledge based projects and intermediate them so that they could be received by industry," Mr Chidambaram said.

Commenting on the growth prospects for the Indian economy, Mr Chidambaram said that he expected the country's gross domestic product to grow close to 9 per cent in the current fiscal. "I am confident that we will achieve that (9 per cent). I don't know where the decimals will fall," he said even while admitting that the country's growth in the last 15 years has been characterised by "fits and starts". India's GDP in the first half of the current fiscal grew by 9.1 per cent.