NEW DELHI (PTD): Indian finance minister, Dr.Manmohan Singh March 1, said that India’s relations with its neighbors needed improvement before the government cut defense spending or reduce its armed forces.
Dr, Singh, who earmarked Rs 191.80 billion outlays for defense in the next fiscal year, told foreign Correspondents that defense accounted forsome2.4% of India’s gross domestic product.
As India’s economy grows, the proportion of defense spending would come down, he said.
Without naming Pakistan, he cited “the unfortunate state of relations with some of our neighbors” to justify the need to maintain defense expenditure at the current level.
“We have to look at the harsh realities,” the minister said, according to AFP.
Dr.Singh said diplomacy was the alternative to rising defense expenditure and asserted that India wanted peace with its neighbors. Dr.Singh said much of India’s defense expenditure went on manpower including the million plus army, which comers a lion share of the military budget, and discounted prospects of cutting down their strength.
Reuter adds: India, which launched a far-reaching reform of its sheltered economy 20 months ago, will eventually compete favorable with China for foreign investment, Dr.Singh said. Dr.Singh acknowledged that communal violence in December and January had created doubts among investors “but I feel confident that in the coming months our system will have the resilience to convince investors that this was an aberration,” he said.
He said it was unfair to compare India’s 2, 3 billion dollar in approved foreign investment since the reform program began in July 1991 to the estimated 13 billion dollar that China attracted last year.
“In China the process of liberalization began as early as 1979, and as far as foreign investment is concerned, the big increases that China is getting. Only came in the late 80’s, Dr.Singh said.
“So there is always the process of meeting transition problems, changing old attitudes, changing old mindsets, and for that patience is necessary.”
“Our program got off the ground only in July 1991. Therefore I think it is premature to compare our experience with China,” the finance minister said. Most of the foreign investment China is attracting comes from overseas Chinese in Southeast Asia, particularly from Taiwan and Hong Kong, Dr, Singh said.
“India has an overseas community, but it’s not as large, as rich, Or as trade oriented: as overseas Chinese are,” he said.
But India, the world’s largest democracy, can provide investors with a more secure legal climate, he said.
“Whatever you may say about the Indian system, in a country like China if a particular person did not get a tender, I don’t think he could go to a court of law to enforce his rights.”
Article extracted from this publication >> March 12, 1993
