Visit of Indian Finance Minister Mr. P. Chidambaram to the US September 21-25, 2005

Press Statement on visit of Indian Finance Minister Mr. P. Chidambaram to the US September 21-25, 2005

Washington, DC
September 25, 2005

Indian Finance Minister Mr. P. Chidambaram visited the US from September
21-25, 2005 to attend Annual Meetings 2005 of IMF-World Bank. Mr. Chidambaram visited New York, Yale and Washington D.C during the visit.

In New York, Mr. Chidambaram participated in an India Investment Forum jointly organized by Euromoney and US-India Business Council on September
21, 2005. He delivered the keynote address in the India Investment Forum. Mr. Chidambaram also met with CEOs of major US companies in two roundtable meetings over breakfast and lunch to discuss issues relating to investments in manufacturing and infrastructure sectors in India.

In his keynote address, Mr. Chidambaram informed that India has consistently achieved near 7% growth rate in last few years. In the first quarter of current fiscal year 2005-06, India had achieved a GDP growth rate of 7.1%. Industrial growth rate was 8.2% during 2004-05. Services sector has grown rapidly in last few years. Mr. Chidambaram stated that India required large investments in infrastructure sector to maintain high GDP and industrial growth rates. India required 10,000 MW additional capacity every year for power generation in next 10 years requiring investment of US $ 10 billion annually. Telecom sector was growing at 50% rate. National Highway Development Project was undertaking large scale road construction in 4 phases with of more than 14000 Km. Large investment was required in modernization of Delhi, Mumbai, Chennai, Kolkata and 25 non-metro airports. Besides ports, railways and other sectors required large investments. Over next 5 years, India needed investment of $ 150 billion in infrastructure sector. He invited FDI from US in Indian infrastructure sector.

He stressed the importance of manufacturing sector in job creation, particularly for semi-skilled and unskilled workers. He said that India had developed considerable strength in sectors such as automobile, steel, textiles and garments, jewellery, chemicals and pharmaceuticals. He invited FDI from US in manufacturing sector in India. He said that 78% of foreign companies in India have reported their business as profitable over a period of time. He said that India as a manufacturing center has many strengths in terms of large domestic market, skilled labour force and low cost of operations.

Mr. Chidrambaram delivered Trumbell Memorial Lecture in Yale University on
‘US-India Economic Relations and the Evolving World Economy’ on September
22, 2005.

Mr. Chidrambaram met US Treasury Secretary John Snow and Dr. Ben Bernanke, Chairman, US President’s Council of Economic Advisors. Secretary Snow is scheduled to visit India in November 2005 for India-US Financial and
Economic Forum Meeting. They discussed ways to increased bilateral economic cooperation between India and US. Mr. Chidambaram and Secretary
Snow also discussed global macro-economic issues such as impact of very high oil prices on global growth, global financial imbalances and G-8 proposal for debt relief for poor countries.

Mr. Chidambaram in his address to the Board of Governor in Annual Meeting
of IMF/World Bank, the Finance Minister said that India endorsed the focus
on the African Action Plan on promoting shared-growth, partnerships in development and the results framework. India had been pro-active in partnering the African countries in their development efforts and sharing development experiences. He said that India welcomed the G8 proposal for additional debt relief recognising that unsustainable external debt could be an impediment to growth and development. This debt-relief should be backed by full additional financing so that the financial integrity of the International Development Agency is not impaired.

He pointed out that ensuring a pro-development outcome of the Doha Round of
trade talks was critical to the growth and poverty reduction prospects of developing countries. The Global monitoring Report 2005 had estimated that
freeing merchandise trade and abolishing trade distorting agricultural subsidies could boost global welfare annually by up to 280 billion dollars by 2015, with more than a third of these benefits going to developing countries. Trade was the most effective and sustainable means of mobilising resources to bring countries closer to realising the Millennium Development Goals. The estimates of agricultural support subsidies in developed countries adding up tp 350 billion dollars was about five times the amount of overseas aid that the world commits. This clearly represents a serious in global priorities.

In IMFC, the Finance Minister pointed out that global economic and financial market conditions were increasingly marred by the heightening of oil price risk. The rise in oil prices resulting from lack of investment in oil exploration, increased global demand for oil, non-transperant oil market structure, and geo-political and natural factors, have caused redistribution of current acccount imbalances amongst countries and augmented global savings relative to investments. He thus called for greater dissemination and transperancy of oil market data and improvements in market structure and continued thrust by the international community for active cooperation and alleviating balance of payments difficulties through compensating mechanism including special oil facilities.