Joint Statement India - U.S. Financial and Economic Forum
November 9, 2005
At the invitation of Indian Finance Minister P. Chidambaram, U.S. Treasury Secretary John W. Snow led an official delegation to India to co-chair the India-U.S. Financial and Economic Forum, which is part of the broader U.S.-Indian Economic Dialogue. The delegations discussed a number of key issues, including fiscal and tax policies, U.S. and Indian efforts to accelerate the WTO Doha Round negotiations, strengthening India's infrastructure, and collective efforts to combat money laundering and the financing of terrorism.
Besides senior officials from the Ministry of Finance, DEA, Government of India and the Department of Treasury USA, representatives from the Board of Governors of the Federal Reserve, Securities and Exchange Commission, U.S. Trade and Development Agency, Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, PFRDA, and the Ministries of Commerce and Industry, Consumer Affairs and External Affairs participated in the discussion.
The U.S. delegation expressed condolences for the tragic October 29 terrorist attacks on Delhi.
In the official meeting, the discussions focused on the following:
The two sides discussed a variety of issues that affect global growth. They noted that global economic performance remains sound, despite the impact of rising oil prices. In India, the growth outlook appears favorable. In the United States, economic conditions remain solid, despite the aftereffects of recent hurricanes. Nonetheless, both the sides noted several potential risks, including the impact of energy prices, the tightening of financial market conditions, and uneven growth in many parts of the world.
Both sides pointed to the need to maintain global growth while reducing global current account imbalances. They noted that major economies have a shared responsibility to implement policies to reduce these imbalances. In this connection flexibility in exchange rate regime becomes crucial. The U.S. side affirmed its commitment to reduce its fiscal deficit and to increase domestic savings. Though the hurricane relief and recovery efforts are likely to raise the budget deficit in the short term, the deficit outlook over the medium to long range is for steady declines due to tight controls on discretionary spending and continued strong economic growth. The Indian side affirmed its intention to pursue policies to maintain strong overall demand.
Financial Sector and Infrastructure Issues
The delegations discussed India's efforts to strengthen its financial system, lower the costs of financial intermediation and increase access to finance for agriculture, small businesses and the poor. Both sides noted the importance of having a strong insurance and pension sector in order to increase long term savings and the availability of long-term financing. Indian officials emphasized their key priorities for financial sector reform, including expansion of financial services to poor and enhancing private sector capabilities. The delegations agreed to arrange further consultations to share experience and expertise on these issues.
Indian officials emphasized their commitment to infrastructure development as a means of reducing poverty and expanding economic opportunities. While public investment in infrastructure will be augmented, the delegations discussed ways of encouraging more private financing for infrastructure projects. The Indian and U.S. sides agreed that a stronger investment climate would encourage more U.S. private sector firms to invest in Indian infrastructure development. Both sides underscored the importance of an effective dispute mechanism that will give greater confidence to investors.
The two sides reiterated the importance of actions to identify and combat terrorist financing and money laundering. They reaffirmed their intention to implement the recommendations of the Financial Action Task Force (FATF) designed to prevent the abuse of financial systems, and they agreed to work together to identify and freeze terrorists' assets.
Both sides agreed to continue technical cooperation in the area of currency security, including detection and enforcement. Preventing the counterfeiting of national currencies is part of the fight against financial crimes and important to maintaining the integrity of the financial system.
India and the United States stressed that a successful conclusion of the WTO Doha Development Round negotiations is essential to promote global trade and growth. They agreed that a satisfactory outcome on agriculture negotiations, as well as services, would be crucial in this regard. They urged for progress at the upcoming Hong Kong Ministerial. DEA Secretary Ashok Jha and Ambassador D. Mulford signed a cooperation framework agreement that will facilitate U.S. Trade and Development Agency projects in India.