By TIOL News Service

NEW DELHI, APRIL 28, 2013: WHILE answering a question in the Lok Sabha, the MoS, Mr Namo Narain Meena, last Friday said that the Indian economy needs the maxim FDI as a percentage of GDP in the current fiscal, and such a requirement would be diminishing during the remaining period of the XIIth Plan.

He said that reducing impediments such as delays in obtaining project clearances, clarifying processes for land acquisition and increasing access to infrastructure are crucial to boost investment and revive growth in the economy. Several steps including the setting up of the Cabinet Committee on Investment (CCI) to fasttrack large investment projects; strengthening of financial and banking sector; permitting FDI in areas including multi-brand retail, power exchanges and aviation etc, have been undertaken over the last few years to boost investment and growth. The Reserve Bank of India (RBI) has reduced policy rates in recent months to support a turnaround in GDP growth.

The foreign investment requirements for the Indian economy (as ratio to GDP), given by the difference between the domestic investment requirement and what can be financed from domestic savings, as estimated by the Planning Commission, for the 12 th Five Year Plan period is given in the following table:

The measures to increase domestic and foreign investment, inter-alia, include setting up of the CII to fast track large investment projects; strengthening of financial and banking sector; permitting FDI in areas including multi-brand retail, power exchanges and aviation etc. The Union Budget 2013-14 has outlined several initiatives to boost investment in infrastructure and industry, that inter-alia include encouraging Infrastructure Debt Funds, credit enhancement to infrastructure companies raising the corpus of Rural Infrastructure Development Fund, introduction of investment allowance for new high value investments etc. The RBI and the Government has undertaken measures including enhancing all-in-cost ceiling for external commercial borrowings between 3-5 years maturity, higher interest rate ceiling for foreign currency Non-resident deposits, deregulation of interest rates on rupee denominated NRI deposits, administrative steps to curb currency speculations etc, that would facilitate capital inflow.