Mukherjee, Geithner aim for complementary growth of India & US

Mukherjee, Geithner aim for complementary growth of India & US As Defence Minister, he inked a game-changing defence pact with the US, as Foreign Minister, he signed the historic India-US civil nuclear deal and now as Finance Minister, Pranab Mukherjee is all set to put India and the US on the path of a "strategic economic" relationship.This strategic economic relationship would not be of competition, unlike that with other countries, but would be complementing the growth and development of each other, officials familiar with the talks between the two largest democratic countries of the world said. Pranab Mukherjee, who arrived Washington on Monday to attend the second annual meeting of the India-US Economic and Financial Partnership, is all set to lay the groundwork for a new era of trade and economic partnership with the United States, officials said. Though no formal agreements or memorandum of understandings are to scheduled to be signed during the day-long talks, officials asserted that the indications so far are that the talks could result in a path-breaking economic relationship between the two countries, following in the footsteps of what Mukherjee did to the India-US relationship when he was the country's Defence Minister and then the External Affairs Minister. This is the first time that an Indian Finance Minister is travelling to the United States with half a dozen top officials -- Governor of the Reserve Bank of India D Subbarao, Secretary of Economic Affairs R Gopalan, Secretary of Financial Services Shashikant Sharma, Chairman of the Securities and Exchange Board of India U K Sinha; Chairman of the Forward Market Commission B C Khatua and Chief Economic Advisor Kaushik Basu. In an unprecedented gesture, the Obama Administration too has lined up its top financial and economic officials.Led by Treasury Secretary Timothy Geithner, who spent most part of the first 20 years of his life in India, the other top US officials to attend the Second Annual US-India Economic and Financial Partnership include Federal Reserve Chairman Ben Bernanke, Securities and Exchange Commission Chairman Mary Schapiro, US Commodity and Futures Trading Commission Chairman Gary Gensler, Federal Deposit Insurance Commission Vice-Chairman Gruenberg and National Economic Council Director Gene Sperling. "The comprehensive inter-agency representation on both sides makes this the highest-level economic meeting ever between our two nations, demonstrating the vision and commitment in both countries for ever-deepening economic partnership," a senior Treasury Official said. Ahead of the talks, Geithner and Mukherjee made a joint appearance at a panel discussion organised by the Confederation of Indian Industry and the Brooking Institute.Geithner said the growth of India was not posing any danger to the United States.In fact it complements the growth and economic development of the US.Geithner later hosted a dinner for Mukherjee, which was attended by officials from both sides."We will discuss in detail how to expand relationship between India and the US and also the other issues on which we share common perception. One of the fundamentals principles of our relationship is that we share many common values," Mukherjee said at the CII-Brookings panel discussion. "The two largest democracies of the world are now engaged not only in strategic partnership but also to expand their relationship in various international fora, particularly G-20, which has emerge as an important fora to address the problems of the world economy. We have taken certain major steps in these fora," Mukherjee said. Geithner said the Obama Administration views this relationship as having enormous potential."I think we are just at the very beginning of unlocking the great potential of this economic relationship. We are going to spend our time in talking about a list of the most important challenges and opportunities between us," the Treasury Secretary said."Obviously as we always do, we would talk about the global economy, the risk and challenges ahead and talk a little bit about economic developments in the United States and India. But our main focus is to look forward and expand and strengthen the economic and trade and industrial relationship," Geithner said, setting the agenda of the talks for Tuesday. Mukherjee is also scheduled to meet Secretary of State Hillary Clinton at the Foggy Bottom headquarters of the State Department.Geithner and Mukherjee would also have lunch with US and Indian CEOs on the sidelines of the meeting.There will be separate working group meetings on macroeconomic policy, access to finance by small business and infrastructure finance at the sub-Cabinet level held on Tuesday afternoon at the Treasury. Senior Treasury officials explained that the Obama Administration has a strong interest in ensuring that both economies reach their full growth potential. "At current growth rates, India could become the third largest economy in the world by 2030. In fact, the Indian government has ambitions to raise India's growth rate to double-digit levels. Faster Indian growth clearly benefits Indian citizens. But India's growth also benefits those, including the United States, who trade with and invest in India," the official said. In fact, officials point out, India and the US have made significant progress in bilateral economic relationship since Geithner and Mukherjee first launched the partnership in India in April, 2010. The US Treasury and Indian Ministry of Finance have met numerous times at the working group level and twice at the sub-Cabinet level to focus on policy coordination and capacity building over the past sixteen months. The partnership discussions on Tuesday will build on that momentum and focus on three broad areas -- macroeconomic policy, financial sector reform and development and infrastructure finance. No let up in economic reforms: Mukherjee: Finance Minister Pranab Mukherjee on Monday strongly refuted observations by US think- tanks, the govt and industry that India has gone slow on economic reforms and insisted that a series of reforms are in the process, which will lead to the next round of growth.Mukherjee observed that reforms in India require political consensus, which is being worked upon by the government led by Prime Minister Manmohan Singh.Reform is a continuous process and the UPA government is committed to it. "The more you reform, there is the need for additional reform," he argued addressing a meeting of India and American corporate leaders, policy makers and think-tank members at a conference on the 'US-India Economic and Financial Partnership' jointly organised by the Confederation of Indian Industry (CII) and Brookings Institute, a Washington-based think-tank. "We have taken certain steps, as I was talking of structural reforms," said Mukherjee, who arrived in Washington on Monday leading a high-powered Indian delegation for the second India-US Economic and Financial Partnership discussions being held here. "We have recently finalised the guidelines of the debt bonds. We have also decided that... FDI to be more user-friendly (and) all prior regulation and guidelines have been consolidated into one comprehensive document which is reviewed every six months. This has been done with the specific intent of enhancing clarity and predictability of our FDI policy to foreign investors," he said. "Ownership and control is now central to the FDI policy and the methodology in this regard has been clearly defined. Discussions are currently underway to build consensus on further liberalisation of the FDI policy," he said. Certain important legislations for reform of banking regulations, enhancement of FDI in the insurance sector and pension fund regulation were introduced in the last session of Parliament, he said, hoping that it would be possible to get these legislations cleared expeditiously by Parliament. "But I was mentioning to Secretary Geithner that in our system, we ought to have the consensus from the other parties, because we do not have the simple majority to get the laws passed in our Parliament. "The talks to develop a consensus are going on and I do hope it will be possible. With the help of the parties concerned, we would be able to get these legislations passed," Mukherjee said. In the areas of taxations, New Delhi, he said, has undertaken two major reforms. "In direct taxes, it is under the scrutiny of the parliamentary standing committee and I do hope that from the next financial year, we will be able to operationalise it," he noted. "With respect of another reform, Goods and Services Tax, (on) which we are trying to evolve a consensus, because of our constitutional practice, these are areas of taxation which the Constitution has authorised the federal and provincial governments to enforce taxes on certain items. Unless the states agree and a constitutional amendment is introduced and passed, this is not possible to make it effective," he said. And for that constitutional amendment, the central government requires a special majority and concurrence of 50 percent of the provincial government. "Therefore, the consensus among the major political parties is absolutely necessary. It would be a very important reform if we are able to get this legislation passed. "We are working on that and if we are in a position to get this legislation passed, to my mind it will be a major reform," he said. "Another important reform we have decided to introduce is the mutual funds to directly attract investment from foreign investors who meet the KYC guidelines, Know-Your-Plans guidelines with a view to facilitate investment opportunity in India. Earlier, these windows were available only to foreign institutional investors," he said. "Along with these in two stages, the ceiling for investment by FIIs into corporate bonds has been increased from the existing USD 15 billion to USD 40 billion. The Finance Minister said during the next five years, the infrastructure requirement would be up to the tune of USD 1 trillion, 50 percent of which would come from the private sector. "Naturally, we do expect that (given) these various measures including the PPP project and the recent guidelines which we have issued for the debt funds, it would be possible for the private sectors to come and make investment."In order to make PPP projects successful, we are providing support through a viability funding mechanism, which is quite attractive," he said.Mediaagencies