“Given the talk of quantitative easing and other steps planned in the US and Europe, it is a good time to sell India as a good destination. We want to have the first mover advantage,” said economic affairs secretary R Gopalan, who leads the team to Riyadh, Dubai, Muscat, Kuwait and Bahrain. The Middle East talk will be followed by a similar exercise in Hong Kong, Singapore and Tokyo, before shifting attention to Europe and the US.
Having already completed two rounds of interaction with investors, the finance ministry has got the impression that the steps taken by the government have not been transmitted effectively. “It is important to allay misapprehensions. The perception (about India) can be corrected if you answer their (investors’) questions,” said Gopalan, while listing a series of steps taken by the government and the health of the Indian economy. Besides, he said that given the measures already announced, the “activity on the ground will generate enough demand and investment” and help address the concerns. Roadshows for Indian governments are a rarity, although China often engages with the investor community.
When asked about the hit on India’s image following retrospective amendments, including the one to levy capital gains tax on Vodafone, the secretary said that the rule was in the statute books earlier as well. While the roadshows had been planned earlier to sell India as an investment destination to retail investors, they would coincide with the slump in economic growth, which slowed to a nine-year low of 5.3% in January-March, 2012.
The team of officers is seeking investments including via corporate bonds and infrastructure debt funds, which could be of the order of $80 billion over the next 18 months or, so according to government’s estimates. While slowing growth is a major concern, the widening fiscal deficit (the gap between government’s revenue and expenditure) and the current account deficit (the difference between foreign trade and transfers) have emerged as fresh worries.
The government, however, said that the fall in international crude prices will help contain fiscal deficit. Along with a dip in demand for gold due to higher duties, it will also curb imports and ease the pressure on current account deficit, which is estimated to reach 4% of GDP.