India sets up investment panel as FDI slumps 78 % in June
India's government on Friday set up a panel to suggest ways to
improve the climate for doing business in the country asfigures showed
foreign direct investment in India slid by 78 percent in June.
The committee, headed by former Securities and Exchange Board of
India chairman M. Damodaran, will prepare a report within six months for
submission to the Congress-led government, the corporate affairs
ministry said.
Overseas investors have increasingly been giving a wide berth to
Asia's third-largest economy -- until recently a sought-after investment
destination.
They have been deterred by a string of graft scandals, red tape, high
inflation, sharply slowing growth and the government's inability to
further open up the economy in the face of fierce political opposition.
The panel will include Indian industrial tycoons Anand Mahindra and
Kumar Mangalam Birla “and come out with a detailed roadmap for improving
the climate of business in India in a time-bound manner”, the ministry
said.
The late evening announcement coincided with the release of official
data earlier in the day showing foreign direct investment (FDI) in June
tumbled to $1.24 billion from $5.66 billion in the same month a year
earlier.
For the financial first quarter to June, FDI tumbled year-on-year by
67 percent to $4.43 billion, according to the department, with big drops
in construction, real estate, mining, and business and financial
services.
The central bank said on Thursday that India could help reverse the
investment decline by shortening investment approval times and sorting
out land acquisition issues.
Central bank governor Duvvuri Subbarao cited the example of
Singapore, an investment hub, to stress the importance of doing away
with cumbersome rules that deter business.
“There is a need to make doing business easy by adopting models like
the one in Singapore where multiple agencies/ministries sit together to
quickly give a decision clearing investment projects,” he said in the
bank's annual report.
Experts say foreign investment is vital for India, which needs to
fund a $1 trillion scheme over the next five years to overhaul its
dilapidated ports, airports, highways and other infrastructure seen as
key to boosting growth.
Among a host of stalled high-profile projects are South Korean
steelmaker POSCO's plans to build a $12 billion mill. The plan has hung
in limbo since 2005, running into trouble over land rights and
environmental clearances.
Prime Minister Manmohan Singh's government set out an ambitious plan
to revive stalled economic reforms in the current parliamentary session
and spur growth, which is at a near decade low.
But its legislative agenda has been jeopardised by a new deadlock in
parliament over allegations the government lost out on billions of
dollars in revenues from a controversial allocation of coalfields.
AFP
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