India’s recent bold reformist moves came in for praise from the US government with Treasury Secretary Timothy Geithner stating that the steps will boost investment and spur growth and income.
“The recent reforms will help provide a foundation for stronger economic growth, an increase in investment, and more widespread gains in income,” Geithner said at a joint press conference held with finance minister P Chidambaram.
Geithner echoed similar views in a meeting with business leaders at a function organised by the Confederation of Indian Industry (CII) later in the day. “I feel very encouraged by the initiatives taken by the Indian government... It's good for us that we are here this time when there is so much change in the air.” Global and domestic business leaders have been unsparing in their criticism about the government’s economic management.
Over the last few weeks, the UPA government has announced a host of measures including politically contentious decisions to allow foreign direct investment (FDI) in multi-brand retail.It also hiked diesel prices by R5 a litre and capped the sale of subsidised cooking gas to six cylinders a year for each household.
The moves had triggered howls of protest, but an the government followed with up with proposals to hike the FDI cap in insurance sector to 49% from the current 26% and has favoured FDI into the pension sector.
Geithner said that the reform initiatives would improve investment climate in India while ensuring that “gains of those growth and investments are shared more broadly by the citizen of India.”
US Federal Reserve chairman Ben Bernanke who is also in India along with Geithner to improve India to improve economic co-operation between the two countries is also scheduled to meet Reserve Bank of India governor D Subbarao.
Chidambaram said he raised the issue of latest round of monetary stimulus or quantitative easing in US with Geithner.