Rangarajan calls for greater synergy with global economy

India can attract greater foreign investment, if it can accelerate growth with reasonable balance on the fiscal and external accounts," said C Rangarajan, the chairman of the 12th Finance Commission.

Delivering the Konda Madhava Reddy memorial lecture here on 'Globalisation and challenges before India', he said that the greater integration of the Indian economy with the rest of the world was unavoidable.

"Opting out of globalisation is not a viable choice. We must recognise that there are many countries which are knocking at the doors of the World Trade Organisation (WTO). What is needed is to evolve an appropriate framework to wrest maximum benefits out of international trade and investment," he stated.

Observing that Indian industry has a right to demand that macro -economic policy environment should be conducive to rapid economic growth, Rangarajan said: "It is, however, time for Indian industrial units to recognise that the challenges of the new century demand greater action at the enterprise level. They have to learn to swim in the tempestuous waters of competition and away from the protected waters of the swimming pools. India is no longer a country producing goods and services for the domestic market alone. Indian firms are becoming and have to become global players. At the minimum, they must be able to meet global competition."

Stressing the need for the Indian industry to look forward and get organised to compete with the rest of the world at levels of tariff comparable to those of other developing countries, Rangarajan also pointed out the responsibility on the part of the government to ensure that Indian industries are not the victims of unfair trade practices.

"The safeguards available in the WTO agreement must be fully utilised to protect the interest of the Indian industries," he suggested.

Rangarajan strongly felt that compared to several developing countries, India was in a better position to wrest significant gains from the globalisation.

"We have many strengths, which several developing countries lack. In that sense, India is different and is in a stronger position to gain from the international trade and investment. India's rise to the top of the IT industry in the world is a reflection of the abundance of skilled manpower in our country," he said.

While appreciating the fact that the Indian economy had become more open in the last decade, he, however, pointed out it was much less open than many other economies.