Monday, April 30, 2012

Indian Economy is Strong

Brushing aside the concerns over impact of the proposed changes tax laws, commerce and industry minister Anand Sharma on Sunday said Indian economy is strong and exuded confidence that foreign investments will continue to flow into the country.

"Investment and taxation are two separate issues", he said, when asked whether the introduction of General Anti Avoidance Rules (GAAR) will hurt foreign investments. "For FDI, we have a policy which is stable and progressive and there have been changes made in the recent past which have gone down well with investors", the minister said.

Finance minister Pranab Mukherjee in his Budget for 2012-13 has proposed to introduce GAAR to check tax evasion by overseas investors. The proposal evoked criticism from institutional investors which felt the move would hurt investment.

Sharma, while recalling the initiatives taken by the government to attract FDI, said, “Some of the initiatives which are under implementation are projects like Delhi Mumbai Industrial Corridor (DMIC) and National Manufacturing Investment Zones (NMIZs).

“These are seriously engaging the interest of our foreign partners and we are hopeful that major developed countries, which are our economic partners, will be investing both in technology and in establishment in partnership with Indian industry”, he said.

On impact of global crisis on the domestic economy, the minister admitted that they would have some impact but the Indian economy was strong enough to withstand the problems.

“If we see our economy objectively, we are being affected by international crisis specially euro crisis and high oil prices. It affects specially exports and imports, thus, impacting the overall current account and trade account. But in actual sense, our economy is strong”, the minister said.

With crude oil and gold alone accounting for over 44% of total import bill of $489 billion and exports losing steam mid-way, India ended the fiscal 2011-12 with the highest ever trade deficit of $185 billion causing a “serious” challenge for the economy.

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