India can grow by 8-9 pc with reforms: L H Loong
"India would be able to grow not just at seven per cent, but 8-9 per cent for another 5-10 years easily, because the potential is there, human capabilities are there," Lee said at a symposium here.
Hailing India`s efforts since economic liberalisation in 1991, he said the country needs to capitalise on its large human capital and build on the success in the information technology sector.
India will have to improve investment climate to attract foreign investments, Lee said, indirectly referring to the implementation the General Anti-Avoidance Tax Rules (GAAR), which was in the midst of controversy recently.
Global industry associations and investors have expressed apprehensions over India`s business environment following the announcement of GAAR. The introduction of retrospective tax as in the case of Vodafone has also added to the uncertainty among overseas investors.
"Companies will look at the consequences (of the changing rules), companies want to make a calculation. If a company has already invested in India, it abides by rule. The companies which have not yet invested in India, they will have to make their assessments. They will look, assess and make calculation that these are the new rules, what does it mean for me after I invest," Lee said.
Every Finance Minister, he added, should look at the implications of changing rules. Referring to the challenges before India, he said, "it`s a very diverse country and you need to find some way to make everybody feel that".
The people, Lee said, must realise that a policy which is good for the country will also benefit states, villages and panchayats. While there is "positive dynamism" in some states, there are states where the "processes are slower", he added.
"Domestic political considerations are never absent. But if you can align those with India`s long-term interest, you will be able to make further progress. However, the transformation is not easy. You have done the easy things. There will be resistance (for difficult actions), but if you can overcome them, I think you will grow a lot faster," Lee said.
He said this is an apparent reference to opposition to big ticket reforms like opening of multi-brand retail to foreign investment and raising of FDI cap in insurance by some of the regional political parties.
On poverty in India, Lee said the country needed to use its IT infrastructure to ensure farmers get the best price and not the middlemen.
"On of the reasons for rural poverty in India is that farmers don`t have options … people don`t have options in their villages. They don`t know what is happening in the rest of the world. They depend on middlemen and intermediaries. Their produce is hugely wasted on their way to markets. They don`t get the price what they should get," he said.