NEW DELHI: As the world economy is showing signs of recovery, there is an urgent need for the emerging markets like India to make immediate investments, especially in the infrastructure sector, to propel the growth momentum, says Finance Minister P Chidambaram.
“Policies to revive growth in most emerging markets, including India, will have to be rooted in increasing investments, particularly in infrastructure,” Chidambaram said addressing the first business session of the 47th Annual Meeting of Asian Development Bank Board of Governors in Astana, Kazakhstan a few days back. He also dwelt at length upon the need to increase ADB resources for lending.
“As most emerging markets are resource constrained, it would be necessary to have recourse to foreign savings for investment,” the minister pointed out, adding that there is, however a need to ensure that the flows to emerging markets are broadly stable.
The best option would be “investment flows with a preference for FDI”, followed by a hierarchy of other sources weighed against the cost of such dependence, he added.
“The world economy is a little better placed now than a year ago. Global recovery appears to have strengthened in the recent months. However, we are yet to reach a stage where we can make a medium-term forecast of a moderate growth,” Chidambaram said.
According to him, the emerging markets with large net exports are facing the slowdown mainly due to weaknesses in the advanced economies and that “there is a need in these markets to rebalance to domestic sources of growth”.
Talking about economies not so dependent on exports, he said there are certain other factors, both local and global, requiring more deft handling and international cooperation.