India a ‘bright spot’: PM Modi tells investors at AIIB meeting
Modi will meet business leaders and captains of industry, for a discussion on issues such as economic growth, infrastructure development, policy initiatives, investment, innovation and job creation.business Updated: Jun 26, 2018 22:39 IST
Prime Minister Narendra Modi on Tuesday termed India a “bright spot”, repeated his government’s commitment to “fiscal consolidation”, and discussed his government’s economic policies with the heads of top Indian firms in a strong defence of the National Democratic Alliance’s management of the economy that has come in for criticism from the opposition over rising fuel prices and inflation.
The country’s “macroeconomic fundamentals” are strong and despite rising global oil prices, inflation is under control, he said. Modi was in Mumbai and spoke at the third annual meeting of the Asian Infrastructure Investment Bank and separately to top CEOs.
India’s retail inflation rose to 4.87% in May but is still within the Reserve Bank of India’s comfort level. The NDA has come under fire for not reducing the tax component of fuel prices which rose in tandem with global oil prices. Hindustan Times learns that the Modi government did consider doing this but decided against it because it could hurt the country’s financial situation, and possibly affect its credit rating.
Sure enough, on Wednesday, Modi spoke about India’s ratings upgrade; in November, Moody’s Investor Services increased India’s sovereign rating for the first time in 14 years.
In his speech at the AIIB meeting, the PM asked the bank to expand its financing to $40 billion by 2020 and $100 billion by 2025 from the current $4 billion.
The AIIB is a multilateral development bank that aims to support the building of infrastructure in the Asia-Pacific region.
India will require $4.5 trillion of investment in infrastructure over the next 25 years, this year’s Economic Survey said. Some of that money will have to come from multilateral institutions and Modi made a pitch for that on Wednesday.
“In India, we are applying novel Public Private Partnership models, infrastructure debt funds, and infrastructure investment trusts to fund infrastructure projects. India is trying to develop brown-field assets as a separate asset class for infrastructure investment. Such assets having passed the stages of land acquisition and environment clearances are relatively de-risked. Hence, for such assets institutional investment from pension, insurance and sovereign wealth funds are likely to be forthcoming,” he added.
India also has low “political risk”, he said, emphasising one of the parameters of concern to global investors. India, Modi added, has received $222 billion of foreign direct investment over the past four years.
The AIIB has committed an investment of $200 million in the government’s National Investment and Infrastructure Fund (NIIF) which aims to channel investments from both domestic and international sources into infrastructure.
“In the fourth quarter of 2017, we grew at 7.7%. In 2018, we are projected to grow at 7.4%,” Modi said
“A New India is rising. It is an India that stands on the pillars of economic opportunity for all, knowledge economy, holistic development and futuristic resilient and digital infrastructure.”
Later, the Prime Minister met with India’s top business leaders, including Reliance Industries chief Mukesh Ambani, the Aditya Birla Group’s Kumar Mangalam Birla, and the Mahindra Group’s Anand Mahindra. The meeting was closed to the media, but officials and businessmen present there said the government sought feedback on his government’s performance and inputs on the state of the economy.
“As important as the issues discussed was the fact that @PMOIndia spent more time at the session than budgeted & also 45 minutes of unhurried conversation over tea with all participants. A powerful & timely signal of confidence in the Business Community,” Anand Mahindra tweeted after the meeting.
The officials said the leaders gave positive feedback to the Prime Minister on the Goods and Services Tax (rolled out almost a year ago, on July 1, 2017). They added that the PM reassured the CEOs that inflation was under control.
First Published: Jun 26, 2018 12:00 IST