India and the U.S. engaged at the topmost levels of finance and macro-economics for the third time since the global economic crisis, with Washington pressing for easier, more transparent and predictable rules which would allow greater investment outlets for its corporate sector.
Meeting at an army institution away from the city hub, Finance Minister P. Chidambaram, and U.S. Treasury Secretary Tim Geithner, also held a news conference at the sprawling venue, during which they said the discussions would continue on the sidelines of the World Bank-International Monetary Fund meeting in Tokyo (from October 9-14) that had already started.
As was the case on the previous two occasions, Mr. Geithner was assisted by U.S. Federal Reserve Chairman Ben Bernanke, and some other senior figures of the Treasury Department officials, while Reserve Bank of India Governor D. Subbarao, and Finance Ministry officials were part of the Indian delegation.
In response to a query on the recent reform initiatives, Mr. Geithner described them as “very promising” and hoped it would improve the growth outcomes for the Indian economy.”
Mr. Geithner pointed out that Washington’s focus was on lowering barriers to trade and investment, and facilitating stronger and more inclusive growth. “We give importance to improving cooperation in bilateral tax matters, including a restructured tax treaty and the implementation of a Foreign Account Tax Complaint Act to address offshore tax evasion,” he said.
“We have made huge progress on financial developments and reforms... We discussed ways U.S. investors and businesses can best help contribute to India’s investment and infrastructure needs,” he added. The meeting also agreed to strengthen cooperation on issues relating to illicit finance, including the efforts to combat money laundering, terror financing and some other financial crimes.
Regarding the interaction, Mr. Chidambaram said three working groups — the standard format for the two previous India-U.S. Financial and Economic Meetings — met later in the day to discuss macro-economic financial sector and infrastructure sector issues.
On the eurozone mess, Mr. Chidambaram said, “We have a deep interest in the crisis being resolved. We know that won’t be easy... That has affected our exports; that has affected capital flows into India.” On the impact of quantitative easing (QE) on India, Mr. Chidambaram said, “I raised the concern that it may impact commodity prices and commodity prices may rise. The U.S. side pointed out that there has been no impact yet on commodity prices and commodity prices may not rise... that we have to wait and see if the QE revises the American economy that is good for us. If the U.S. economy grows, it will help us in our exports, it helps us in attracting more capital inflows.”