United States President Barack Obama kicked off a firestorm in India after he expressed concerns on Sunday over the deteriorating investment climate in the country to endorse another ‘wave’ of economic reforms. Here is a quick rundown of his comments and the backlash.
1. Commerce Minister Anand Sharma said the American President was right to convey his perception and that India has “taken note” of his remarks. “We followed a calibrated approach in liberalisation, india is one of the most attractive FDI destinations,” he said, adding that the US should be leading the fight against protectionism.
2. Montek Singh Ahluwalia, deputy chairman of the Planning Commission, said that “Many countries have been expressing concern over investment climate. We should take these factors into account,” he said.
3. Anand Mahindra, chairman of the Mahindra Group, one of India’s largest conglomerates, also took a charitable view of the US President’s comments. “Obama’s interview was diplomatic and measured,” he tweeted. “Rather than react with customary defensiveness we ought to treat it as the ‘Voice of the Customer’.”
4. Political parties, however, were less forgiving. Corporate Affairs Minister Veerappa Moily said that “Certain international lobbies like Vodafone are spreading this kind of a story and Obama was not properly informed about the things that are happening, particularly when India’s economic fundamentals are strong.”
5. Mukhtar Abbas Naqvi, a vice president of the Bharatiya Janata Party, the country’s largest opposition party, called the US President’s remarks “laughable”. “That country is giving us a certificate on investment and economy when it itself is facing economic problems. We have to ensure our national interests on our own,” he said.
6. The Communist Party of India (Marxist), an ally of the ruling United Progressive Alliance in its first term, reacted strongly, too. “They want to open up our economy and market on their terms. For this purpose they are creating this pressure…as it is, no one believes that under the present situation, there will be any sea change in the investment scenario world over,” said party leader Nilotpal Basu.
7. On Sunday, while not directly critical of the investment climate in India, the US President said many in the American business community have expressed concerns that the investment climate in India is deteriorating. “They tell us it is still too hard to invest in India. In too many sectors, such as retail, India limits or prohibits the foreign investment that is necessary to create jobs in both our countries, and which is necessary for India to continue to grow,” said President Obama.
8. He noted that “there appears to be a growing consensus in India that the time may be right for another wave of economic reforms to make India more competitive in the global economy.”
9. Obama also reiterated that “as India makes the difficult reforms that are necessary, it will continue to have a partner in the United States”. However, he declined to prescribe any solutions. “It is not the place of the United States to tell other nations, including India, how to chart its economic future. That is for Indians to decide,” he said.
10. He also lauded the Indian economy’s position as a driver of global economic growth. “Indian innovation is an engine of the global economy. And even with the recent challenges, the Indian economy continues to grow at an impressive rate,” Obama said. The Indian economy slipped to a 6.5 per cent GDP growth rate in fiscal 2012, lower than the past two years, but still faster than most developed nations which are struggling with low growth rates or, in some cases, outright recession.
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