NEW DELHI; The newly elected prime minister of India urged the United States to erase “Old perceptions” about India, and expressed blunt interest in sharply increasing American economic and political links.

Prime Minister P.V. Narasimha Rao said in an interview that “the sky’s the limit,” in terms of potential American investment.

Rao expressed hope that trade with the United States will “improve vastly”.

And he said that closer U.S. India political ties are crucial, especially in the aftermath of the turmoil in the Soviet Union and the dissolution of the Soviet grip on Eastern Europe.

“We will do everything to make the relations closer”, Rao said of the United States and India, adding that the “old perceptions” by the United States that India is hostile to Washington and leans toward the Soviet Union are outdated and irrelevant.

American officials in New Delhi expressed delight at Rao’s comments-his first to an American reporter since becoming

AUS, Embassy official said, “It sounds very positive and we look forward to working with Mr. Rao in achieving the objectives he outlined.”

Rao, 71, heads a minority government. He and his finance minister, Manmohan Singh, have begun what the prime minister termed an “unprecedented” and “drastic” overhaul of the Indian economy, which has been crippled for decades by bureaucratic red tape, massive inefficiency, corruption, low productivity, excessive governmental involvement and years of resistance to foreign investment.

Facing a huge foreign debt and dangerously low foreign exchange reserves, Rao has dropped socialism from his party platform and replaced it with Indian-style Capitalism, That policy investment and trade liberalization, opening markets to competition, devaluation and possible reductions in huge subsidies as well as the bloated bureaucracy.

The Indian government seeks a $7 billion to $9 billion loan from the International Monetary Fund.

“Our economic situation has been drifting,” said Rao, “Without these reforms, our difficulties will never end”.

NY Times

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