Roemer: India Must Reform or Risks Slowdown
NEW DELHI--The U.S. ambassador to New Delhi said Tuesday that India needs to consider whether it is delivering on its side of the new close alliance with the U.S. and do more to tackle graft and encourage foreign investment or the nation's economic expansion risks losing steam.</br></br>"India needs to be asking itself: Is it delivering on the global partnership?" Timothy Roemer said in an interview with The Wall Street Journal as he prepares to leave the post next month and return to the U.S. "The international business community that was pouring money and investment potential into India last year and the year before is now pausing and saying: 'Where is India heading in terms of investment opportunities, the corruption challenge and inflation?'"</br></br>If this perception doesn't change, he added, India could see downward revisions of as much as two percentage points to estimates for growth this year, considering the impact of higher oil prices and high inflation. Earlier this month, C. Rangarajan, chairman of the Prime Minister's Economic Advisory Council, forecast Gross Domestic Product growth in the year ending March 31, 2012, of 8.5%, below the government's forecast of 9%, as a series of interest rate rises to combat high inflation crimps growth. A spokesman for the Prime Minister's Office had no immediate comment.</br></br>Foreign direct investment in India, after rising steadily for years, totaled $18.4 billion from April 2010 to February, down 25% from a year earlier, according to Indian government data, amid a series of corruption scandals that have paralyzed the government and a lack of progress on economic reforms that would make the market more attractive for foreign firms.</br></br>Mr. Roemer's warning comes after two years - his tenure in New Delhi -- in which the U.S. and India have, in many respects, dramatically expanded their cooperation and partnership on issues ranging from counter-terrorism to environmentally-friendly technology to coordination over regional policy in Afghanistan.