— Photo: Shashi Ashiwal

FINANCIAL WIZARDS ALL: Prime Minister Manmohan Singh with RBI Governor Y.V. Reddy and former Governors in Mumbai on Saturday to release the third volume of the History of the Reserve Bank of India. From left: S. Venkitramanan, C. Rangarajan, M. Nara simham, Bimal Jalan and Y.V. Reddy.

MUMBAI: Prime Minister Manmohan Singh on Saturday said there was merit in India moving towards fuller capital account convertibility and this would facilitate the transformation of Mumbai into not only a regional but also global financial centre.

"I have requested the Finance Minister and the Reserve Bank of India to revisit the subject and come out with a road map on capital account convertibility based on current realities," he said.

Capital account convertibility refers to the freedom to convert local financial assets into foreign financial assets and vice versa at market determined rates of exchange.

Dr. Singh was inaugurating the Asia Society's 16th Asian Corporate Conference on `Driving Global Business: India's New Priorities, Asia New Realities,' here.

He said Mumbai had the human skills, connectivity and advantage of location to become the financial capital of Asia. "It will get the infrastructure it rightfully deserves to realise this dream" to become the bridge between Asia and the West in the world of finance.

India was forging partnerships with countries of the region through free trade and economic cooperation agreements. "We have concluded free trade agreements (FTA) with SAARC, Singapore, Thailand and ASEAN. We are working on similar arrangements with Japan, China and Korea. This web of engagements may herald an eventual free trade area in Asia, possibly extending to Australia and New Zealand. This pan-Asian FTA could be the future of Asia and, I am certain, [could] open up new growth avenues for our own economy."

India had to reduce the transaction cost of doing business in the country. "We have to bring our infrastructure in line with global standards. We have to ensure global best practices in our regulatory institutions and system. We need to simplify regulatory and approval procedures."

Dr. Singh said, "I recognise that there has been a relative neglect of manufacturing in India in recent years."

To revive the manufacturing industry, to make it globally competitive and to make it the driving force for employment and economic growth "we have unveiled ten-year national manufacturing initiatives. Emphasis will be placed on labour-intensive sectors."

Dr. Singh said focussed attention would be given to the growth of India's dynamic services sector, including software, outsourcing, tourism, education and healthcare.

At the same time India was reforming the institutional architecture within which enterprises functioned.

"We are trying to reform the legal system to reduce arrears and improve the speed of the justice delivery system. We are examining the possibility of having alternative dispute resolution mechanisms, particularly for commercial disputes."

Dr. Singh said the telecommunication boom of the past decade had to be sustained, for which "we are working towards releasing an additional spectrum to mobile telephone firms. We hope to raise India's annual growth rate to the range of 9 to 10 per cent."

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