January 18, 2006
India Fin Min: Hopes To Sign FTA With Japan Before China
By Stanley White
Edited by Shawn Schroter, Jay Alabaster and Chris Gallagher
TOKYO -(Dow Jones)- Indian Finance Minister P. Chidambaram said Wednesday that India hopes to conclude a free trade or similar economic partnership agreement with Japan before it concludes one with China.
"We are talking with both countries, so as to which comes first I don’t know. But I hope an agreement with Japan comes first," Chidambaram said after a speech in Tokyo.
Chidambaram also said the message he would like to deliver to Japanese policy makers and business leaders is that India is committed to economic reforms, it is open to doing business and Japanese participation is valued.
Earlier this week Chidambaram said the Indian government will soon approve measures to ease foreign direct investment in several sectors to improve the country’s infrastructure.
After concluding his speech in Tokyo Wednesday, Chidambaram said he expects FDI in fiscal 2005 to total around $10 billion if one takes account of direct investment, reinvestment and the money companies borrow to invest in India. Chidambaram added that he expects FDI in fiscal 2006 to grow even more.
Chidambaram said the government is on track to meet its fiscal and revenue deficit targets for the current fiscal year. The government is aiming to lower the fiscal deficit to 4.3% of gross domestic product and bring the revenue deficit down to 2.8% of GDP at the end of March.
The finance minister also said India’s deficits would improve even more in the future.
"I am confident that by 2008-2009, we can bring the fiscal deficit below 3% and the revenue deficit will become almost flat," he said.
As India’s finances improve, government borrowing as a ratio of GDP will fall over time, Chidambaram said.
He also said it may take some time for oil prices to stabilize, but if they did then the government could consider dismantling its subsidies on domestic fuel prices.
Chidambaram also said that while subsidies that largely benefit the middle class should be phased out, subsidies for food and fertilizer cannot be abolished as they benefit India’s large rural poor population.