Finance Minister P Chidambaram today rejected suggestions that India is imposing restrictions on investments and said the country's economy is opening up in a gradual manner.
"I think the right way to look at it is we are not restricting, we are opening up in a gradual manner. In the space of 22 years, we have opened practically 90% of India's economy," Chidambaram said at the popular Charlie Rose Show in an interview.
"There are still some areas which are closed or which are restricted but they will open up. The areas that are being opened up are so large. Steel, power, roads, airports, seaports, all this is open. Therefore, there's a huge opportunity for investors," he emphasised.
Observing that India has opened up 90% of its economy in the 22 years of liberalisation since 1991, Chidambaram said that the country could become a "giant economy" if it grows at 8% continuously the for seven-eight years.
"See, our savings rate in the worst year was 30%. In the best year, was 36% of GDP. Pick any number between 30 and 36 for incremental capital output ratio, what economists call ICOR, is about 4. Our potential growth rate is about 8%," Chidambaram said.
"If we continue to grow at 8% for, say, seven years or eight years or ten years, like China did at 10% for over ten years, it compounds, and we become a giant economy," the Finance Minister said.
Chidambaram is currently in Washington to attend the annual Spring meeting of the International Monetary Fund (IMF) and the World Bank. The Finance Minister held a series of bilateral and group meetings related to the IMF, World Bank and G-24.
Noting that India does not encourages joint ventures with the government, Chidambaram said in most areas, New Delhi allows 100% foreign direct investment.
"This argument has been made about India, I think it might have been Jim O'Neill of Goldman Sachs, saying that they don't govern enough, that politics has to get better. Does that ring true to you at all? Do you know what he might be saying?" Charlie Rose asked.
"It is true of India. But let me add, it is true of every country. We can have better governance. I don't think you should generalise. There are many states in India where there is good governance. The central government generally provides good governance. But there are weaknesses," Chidambaram said.
"We need to identify those weaknesses and rectify them. But how can anyone say that we have reached the Acme of governance? Obviously governance can improve. We need to learn, for example, from the Japanese or the Chinese how to execute a project on time without a cost overrun," he said.
The Finance Minister said that he does not subscribe to the theory that America will decline.
"I have not subscribed ever to the theory that America will decline. America's great strength is its ability to attract talent from all over the world," Chidambaram said.
"It's a country built on talented immigrants, hungry immigrants, people with fire in the belly. That's its greatest strength. The second great strength of America is its universities. Nowhere in the world do we have such universities," he said.
The Finance Minister was responding to questions about a group of analysts saying that the US is on decline.
Chidambaram said there are no clear signs that recovery has begun in all countries.
"For example, global economy actually slowed from 2011 to 2012. And although there are estimates that go to increase by a few percent, few decimal points in 2013, that's not very clear to me," he said.
"Advanced industrial economies have slowed even further. Advanced industrial economies average growth is one-half the average for the world. Now look at BRICs, the emerging large economies," he said in response to a question.