how to attract foreign investment

30/09/2013

If any country is interested in attracting foreign investment, it should do the following.

1. to clearly identify the areas in which foreign investment is required

2. decide the incentives that will be available for investing in the country

3. indicate the infrastructure available

4. formulate the advantages in investing in the country

5. work out the approximate cost of production of goods and services in the country

6. estimate the size of the market

7. write the success stories of 2-3 foreign investors in the country in the same area or similar areas

Pamphlets should be printed including the above points and sent to the countries’ Embassies/High Commissions abroad. The Embassies/High Commissions should send these pamphlets with a covering letter to the concerned companies. For example if investment is required in telecom sector, pamphlets should be sent to all (big or small) telecom companies in the country of their accreditation.

The pamphlets should also be sent to general investing companies- venture capital companies, institutional investors, fund managers etc.

The responses from them should be complied and sent to concerned department in the home country. Thereafter only the department officers/minister should visit the foreign country to meet the potential investors who should be invited to visit home country for further discussions, to visit to places etc.

This way it will be easy to attract foreign investment.

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Mr.P.V.Narasimha Rao, the most efficient Prime Minister of India

16/01/2013

It is unfortunate that the people of India do not talk much of the Prime Minister of India during the period June 1991- May 1996, Mr.P.V.Narasimha Rao, who was responsible for bringing in economic reforms. Implementation of these economic reforms lead India to be the 3rd largest economy in the world after USA and China. To attain this position, India has overtaken Japan, Germany,France, UK, Italy, Russia and Brazil.In 1991, when Mr.Rao became Prime Minister the foreign exchange reserves were only about US$ 1/-billion and now it is around US$ 300 billion. When Mr. Rao assumed Office, the gold reserves of the country had been pledged to raise loan. Now the country is importing hundreds of tonnes of gold for its reserve. India has also emerged as an investor in foreign countries.Even developed countries are inviting Indian industrialists to invest in their countries. In 1991 Foreign authorities were tightening their visa restrictions for Indian nationals but now they are liberalizing their visa regulations for Indians to attract Indian tourists. In 1991 there was huge unemployment but now there is acute shortage of labour in every sector of the economy.

(Of course there is a long way to go to reach the per capita income level of developed countries. Agricultural production is still very low.Infrastructure is grossly inadequate in spite of the initiatives taken by Mr.Rao.)

Considering the impact of his policies and initiatives on Indian economy,India should honour Mr.Narasimha Rao in an appropriate manner- naming his birthday as national economic liberalization day, issuing commemorative stamps etc.


Bihar under Mr. Nitish Kumar’s rule has not changed.

04/08/2012

When Mr. Nitish Kumar assumed office of the Chief Minister of Bihar in 2005 (earlier he was CM for a few days in 2000) there were great expectations. Under his leadership, Bihar was expected to improve in the law and order situation, infrastructure and the economy. At that time Bihar had the lowest per capita net state domestic product(NSDP). Now after years of his rule Bihar still has the lowest NSDP of Rs.20,000 (2010-11) Haryana’s NSDP is over Rs.92000. There is no significant improvement in the law and order situation or in infrastructure.

In spite of his best intentions and efforts the CM could not effect much improvement because it seems that the people are not in a mood to work hard and honestly. It is time to urge people to put in hard work and be honest and committed in work. The other reason is that the state is too large to govern effectively. It has a population of over 10 crores (of course UP and Maharashtra are bigger). Bihar is bigger than about 180 countries out of about 193 countries in the world. For administrative convenience and faster economic development and social improvement, Bihar should be divided into two states. Even with less efficient administrations, both the new states will develop much faster than now.


World Population and food grain production

25/08/2010

The world population is growing at the rate of about 1.3% – a few decades ago, the growth rate was over 2%- and will soon reach 7 billion. The world food grain production is around 2200 million tonnes which works out to a per capita production of about 300 kg per year. If cattle are not fed with grains the current level of production can sustain 10 billion people. India for its population of about 1175 million produces about 220 million tonnes and is said to be self-sufficient or even marginally surplus. This means that per capita food grain requirement is only about 200 kg per year.

In  recent years, the annual increase in food grain production is not satisfactory. However, with several countries in Africa and Latin America like Ethiopia, Tanzania, Sudan, Uganda, Congo, Brazil, Uruguay, Paraguay selling or giving on lease large areas of farm land to foreign governments, foreign corporates and individuals, the production is likely to increase substantially in these continents. This is a welcome development, as Africa’s population growth rate is very high with several countries like Democratic Republic of Congo, Ethiopia, Kenya, Uganda, Sudan, Madagascar, Nigeria and Tanzania registering population growth of 2% to 3.5%. Moreover, the continent is already highly deficit in grains.  Fortunately, in both Africa and Latin America, land utilization for agriculture is very low- less than 10% of the potentially arable land.. With the near stagnant or negative population growth in Europe, North America(here most of the growth is by immigration) and a few Asian countries like Japan, South Korea, the share of Africa and Latin America in world population  will keep increasing

The governments in Africa and Latin America should also allow foreign and local private sector to provide on “Build, Operate and Transfer” basis agricultural infrastructure like irrigation projects- dams and canals, rural roads, grain storage space etc. 

There is strong criticism in certain quarters against what they call “land grab” and “agri-colonialism” in Africa and Latin America. They also express fear that several small scale farmers will become jobless. These are unfounded. Bringing in large areas of land under cultivation and building infrastructure will generate large scale employment even if these sectors are completely mechanized. Since land utilization in these continents is very low, compared to other continents, there is not going to be any ecological problems. It is also to be remembered that some European countries including Russia have sold/leased out land to foreigners with a view to increase local food grain production. 

The growing world population should not cause worries if the land deals in Africa and Latin America become successful.


Study Loans or Scholarships?

28/04/2010

Several poor brilliant students get assistance from various sources, by way of scholarships of sufficient amount for higher studies. In the university if they study well and score high marks they get employment through campus selection. Many of them receive handsome remuneration (a monthly salary of over Rs.50000/-.(fifty thousand).) If they had been given loans they would not mind repaying and could repay the same easily in a few years. Since they get assistance scholarships, they do not have to repay the amount. But why should not they not be made to take loans and to repay the same when they earn and are in a position to repay? If this is done more students could be assisted to pursue higher studies. It is time, the government, universities/colleges, charitable organizations etc. give up giving scholarships and extend study loans to more students

Similarly the government run hostels for school students and college students, instead of providing boarding and lodging free, could charge reasonable amount and treat this as extending loan to the students. They can repay the loan, when they get employment. With this amount government can run more hostels.

The above measures could make the people more responsible and dignity conscious. The government’s responsibility could be restricted to providing infrastructure while the beneficiaries should become responsible for running expenses


India’s interests differ from those of several developing countries

10/12/2009

It will take a long time for India to become a developed country, in spite of the fact that it is now the fourth largest economy (in PPP terms) in the world behind USA, China and Japan. Of late India has become an industrialized country – though in terms of per capita income, it is among the low income countries. Out of 181 countries for which IMF compiled data, India is placed at #130, much below several developing countries to whom India extends technical and economic assistance.

In terms of infrastructure, industrial & agricultural development, scientific research and development, particularly in hi-tech areas of atomic energy, space science, pharmaceutical industry, ocean science, information technology, India is far ahead of most of the developing countries. In many cases, India’s interests are different from those of several of developing countries. Some of the areas where India’s interests coincide with those of developed countries are:

  • Indian banks like those of developed countries’ banks have established their branches in foreign countries. Sooner or later, there will be large scale expansion of Indian bank branches abroad.
  • Indian companies have set up factories in many countries and these may increase in the coming years
  • India is exploring natural resources in several countries as do the developed countries (of course there are foreign companies in India also) and in the days to come, these activities will expand.
  • Indian companies have invested in several foreign countries and these investments will keep increasing.
  • Indian medical treatment is well developed and patients from many developing countries(as also developed countries) take treatment in Indian hospitals.
  • An increasing number of foreign students come to India for studies (though many Indian students also go to other countries for higher studies).
  • India provides economic and technical assistance to over 125 countries.

In any case, India should aspire to become a developed country as early as possible. It would be in its interest, if India could look after its interests in international forums rather than being a spokesperson of the developing countries.