Improve your investment climate: ADB

Says the service sector needs to create more jobs for the millions who will join the workforce every year

With critics saying India's growth story was not creating enough jobs, the Asian Development Bank (ADB) today asked the country to reduce "burdensome" regulations so as to unleash the services sector’s potential and to improve the investment climate to boost manufacturing, so that young hands could be employed.

On the opening day of its 46th annual meeting, held here, Takehiko Nakao, the bank’s new president, said: "Considering India’s young and growing labour force, the service sector needs to create more jobs for the millions who will join the workforce every year. We all know that India has to reduce burdensome regulations to allow the sector to be more competitive and dynamic."

He complimented the government on its recent reforms. Sourcing norms have been diluted for 100 per cent foreign direct investment (FDI) in the single-brand retailing sector and up to 51 per cent FDI allowed in multi-brand retailing (subject to approval of the state government concerned).

Nakao said improvements in the investment climate were vital, especially if India was to realise its potential in manufacturing.

Finance Minister P Chidambaram, who was to chair the ADB board of governors, could not make it to a seminar on the first day, as he was busy in the Rajya Sabha, where the Finance Bill was to be passed. Economic Affairs Secretary Arvind Mayaram read Chidambaram's speech in his absence, focusing on innovative methods for inclusive growth. Chidambaram came to the venue later but did not interact with the media; he held informal talks with the governors.

Nakao, addressing his maiden press conference as ADB chief, asked emerging market economies to use the advanced world’s expansionary monetary policy to its advantage but keep an eye out for asset bubbles. He said ADB could find maintaining its lending level to India a big challenge, as its income from surplus resources invested in advanced countries fell with the fall in interest rates. ADB would be interested in promoting certain projects, he added.

The Manila-based multilateral lender had extended a $2.4-billion loan to India across the transport, energy, commerce, industry, trade and finance sectors in 2012. India is the biggest single borrower from ADB.

INDONESIA RATING CUT FELT IN INDIA

• Journalists were waiting for Finance Minister P Chidambaram to come to the seminar. Suddenly, somebody said Standard & Poor's has upgraded India's sovereign rating. Every journalist ran to cross-check the news. It turned out that somebody had misread Indonesia as India: S&P had lowered the outlook on sovereign ratings of Indonesia from positive to stable.
• ADB’s dress advisory became the talk of the town but officials played it down. “This is the usual advisory that we give. Other global bodies also send these advisories on cultural sensitivities of the host country,” an ADB official said. The advisory says Indians are conservative about dressing and advises women to dress modestly, with legs covered.
• In an interaction with journalists, ADB President Takehiko Nakao was asked what was the result of such conferences. Nakao, who took over the ADB reigns a few days back, said though media expects a strong response from such conferences, it should be remembered that exchange of ideas between media, academics and others is also very important.