U.S. Treasury Secretary Paul O'Neill says India can spur economic growth by lifting trade barriers to promote investment. The American official is currently on a visit to India for a meeting of finance ministers from 20 countries.
Mr. O'Neill says India is rated among the most restrictive countries in the world in terms of trade and investment rules. As a result, the country has attracted less foreign investment, compared to other Asian nations, such as China, although it needs foreign capital to boost growth.
Mr. O'Neill says American investment in India has declined in recent years, falling from a peak of more than $737 million in 1997 to less than half that in 2000. "Unreasonable regulation also deters international businesses and local entrepreneurs alike from entering new markets and creating value," said Paul O'Neill. "No one wants to spend time and capital fighting a system that is unfriendly to success and fears competition."
The U.S. official says India should be able to achieve fast economic growth, because it is a democracy and because many people speak good English, the language of modern business. But, Mr. O'Neill says, the country needs to improve governance, and grant more economic freedom. "If the government will take the steps that are necessary, so that foreign investment will come, it will come. It will come in the same amount as in China," he said. "If there is a rule of law, and there are enforceable contracts, and people don't have to pay somebody in order to get the services they need, it will come, and you will develop faster than China."
Mr. O'Neill praised India's information technology sector, saying it demonstrated some of the highest productivity levels in the world.
Mr. O'Neill visited Afghanistan and Pakistan before arriving in India. In New Delhi, he is attending a meeting of the Group of 20 nations, a gathering of some of the world's richest and poorest countries. Finance officials from these countries meet once a year to discuss important global economic issues.
The New Delhi meeting is expected to discuss progress made on cutting funding for terrorist groups, and also focus on ways to pull the global economy out of the slump it has faced since the September 11 terrorist attacks in the United States. The Group of 20 includes Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Korea, Turkey, the United States and the European Union.
Speaking about the U.S. economy's prospects for growth, Mr. O'Neill said analysts expect the U.S. economy to grow at three percent by the second and third quarters of next year.