FM speaks against protectionism, says it will be misguided

Boston: Any move by developed nations to engage in financial protectionism and keep savings at home will be "terribly misguided", Finance Minister P Chidambaram said on Wednesday.

"We constantly hear of moves in industrial countries to engage in financial protectionism, to keep savings at home in order to finance over-extended industrial country governments.

Any move in this direction would be terribly misguided," he said, addressing students and faculty of Harvard University.

Chidambaram arrived in Boston after two days in Canada to project India as a viable investment destination.

"Industrial countries, with their ageing populations, would seem to have a matching need – a need, as they increase their savings, to see them invested in attractive long term instruments producing adequate returns," he said.

"There is a perfect match here, provided both sides work at reducing barriers," he added.

Chidambaram said emerging markets need to reassure international investors that their capital is well protected.

"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? 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," he said.

"India has all three. So have many other emerging markets," he added.