India has all qualities to protect foreign investment: FM
Chidambaram, while addressing students and faculty of Harvard University on 'The Rise of the East Implications for the Global Economy', said, India has all the qualities that provide guarantee to investors that their investment will be protected.
Chidambaram arrived in Boston after two days in Canada to project India as a viable investment destination.
He said foreign investors should be assured by emerging economies that their capital will be protected and not affected by "whims" of governments.
"Emerging markets have to increase the comfort level of international investors, to improve their sense that their capital is well protected," Chidambaram said.
"After all, why would they invest over the long term if their capital can be expropriated by a change in laws or by the whims of the government," he said.
"The best guarantor of investment protection is a stable and democratic political structure, a belief in the rule of law, and a transparent and independent legal system. India has all three," he said.
"We constantly hear of moves in industrial countries to engage in financial protectionism, to keep savings at home in order to finance overextended industrial country governments. Any move in this direction would be terribly misguided," the Finance Minister said.
Chidambaram also underscored the need for new multilateral institutions given that economic power centres shift to the emerging markets.
"Global multilateral organisations were set up to deal with a set of problems based on an agenda and a framework set by the industrial countries," he said.
"The problems have changed, the players are different, and their relative importance has altered significantly, but the organisations, the agenda setting, and the lens through which solutions are devised have not changed enough," Chidambaram said.
"Even as the old great powers still dominate the multilateral organisations, thus causing emerging markets to remain silent or sullen, new structures like the G-20 are yet to find traction. There is a vacuum in global economic policy discussion that can prove dangerous as the shift in economic power creates new frictions," he said.
Chidambaram said that new multilateral institutions, that are set up for the post-financial crisis era and are not compromised by the legacy of the past, are the need of the hour.
"A real concern is that the old great powers do not feel the need for change because they know the emerging markets do not have common goals and can be easily divided. But denying emerging markets real power will be very shortsighted," he said.
He noted that inclusive growth is not an option but an "imperative" for India.
"In my view, a good, decent job is the best form of inclusion. So, India's efforts have been focused on trying to enable the poor to obtain better nutrition and health, education and skills, and financing, that will allow them to secure good livelihoods," he said.
He pointed out that India is undertaking massive efforts to empower the poor through a system of rights-based entitlements including the right to information, the right to education, the right to medical care, and the right to food.
"Inclusive growth will enable India to have a fairer, and in many ways more stable, society," he said.