India's finance minister vows to restart growth

India's new pro-market finance minister on Monday pledged to take steps to restore foreign investors' faith in Asia's third-largest economy and "restart the growth engine." P. Chidambaram, in his first public statement since taking over the job last week, said India's economy faced a string of challenges from stubborn inflation to high interest rates and a hefty fiscal deficit. But "with sound policies, good governance and effective implementation, we will be able to overcome these challenges," said Chidambaram, now in his third stint as finance minister. In a wide-ranging policy statement, Chidambaram said he believed there was "enormous goodwill" for India around the world and that most people "continue to keep faith with the India growth story. "The key to restart the growth engine is to attract more investment, both from domestic investors and foreign investors," he said, adding it was vital to remove any "distrust" in investors' minds since investment "is an act of faith." Attracting foreign investment is crucial to India upgrading its dilapidated airports, roads, ports and other infrastructure in order to ease bottlenecks and spur sharply slowing economic growth. The once-booming economy grew just 5.3 per cent between January and March, its slowest annual quarterly expansion in nine years. The left-leaning Congress-led government, Chidambaram said, would take steps in the next few weeks to attract investments in mutual funds and insurance. Importantly for foreign investors, he promised to review retroactive tax measures "to find fair and reasonable solutions," adding India is aiming for a "non-adversarial" tax regime. "With these measures, and some other measures we hope to take in the short term, it is our intention to raise the level of investment," Chidambaram said. The previous finance minister Pranab Mukherjee, who now occupies the mainly ceremonial role of president, rattled foreign investors in the budget he introduced in March with sweeping anti-tax evasion rules. Government officials had said they aimed to pursue British mobile phone giant for $3.72 billion in capital gains taxes stemming from its 2007 takeover of Hong Kong-based Hutchison Whampoa's Indian cellular unit. From:Gulftoday