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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Arran Yuan who wrote (24605)	10/30/2007 11:31:25 AM
From: elmatador	Read Replies (1) \| Respond to of 217866

Paulson in India With a long list of advice, requests, predictions and recommendations for India Paulson in India With a Wish List for Economic Changes BY HEATHER TIMMONS Published: October 30, 2007 MUMBAI, India, Oct. 29 — Treasury Secretary Henry M. Paulson Jr. did not arrive in India empty-handed. Mr. Paulson, who landed in Calcutta over the weekend, came bearing a long list of advice, requests, predictions and recommendations for India, which has the world’s second-fastest-growing major economy after China. “India’s remarkable growth has proven the wisdom of economic reforms and their promise for the future,” he said Monday morning. “In the long term, India can take a number of steps to become even more competitive.” Mr. Paulson is making his first trip to India as a government official to urge a successful conclusion of the deadlocked world trade talks, to push for expansion of India’s capital markets and to urge regulators to open the financial sector to foreigners. His visit comes as international investors’ fears about the United States economy have pushed cash into Indian stock markets, propelling them to records and generating concerns of a bubble. The Sensex index of the Bombay Stock Exchange traded above 20,000 for the first time on Monday, and closed up 3.82 percent at 19,977.67. Still, the falling dollar is putting pressure on India’s global exports, and a crucial United States-India agreement on nuclear power seems close to collapse. Foreigners are prohibited from majority ownership in many sectors of the Indian economy, including finance, power and railroads, and are not allowed to participate in markets like commodities exchanges. There are limits on the money that Indian individuals and companies can invest overseas. India’s restrictions have sometimes been beneficial in unexpected ways. Indian banks, for example, avoided problems from the United States subprime mortgage market in part because of restrictions on investing in complicated financial instruments that hold risky loans. But Mr. Paulson said that capital restrictions “lead to distortions,” a direct criticism of recent moves by Indian regulators to curtail short-term investment in India’s stock market. Late last week, market regulators in India approved rules that prohibit anonymous foreign investors from participating in India’s markets. The new rules could drive some hedge funds out of the markets. Mr. Paulson, a former chairman of the investment bank Goldman Sachs, said Monday that he thought these rules could be detrimental if not applied correctly. Restrictions on capital flows are “blunt instruments and can have unintended consequences,” he warned. A group of American executives, including William B. Harrison, a former chairman of JPMorgan Chase, and Richard H. Frank, the chief executive of Darby Overseas Investments, a unit of Franklin Templeton, accompanied Mr. Paulson in Mumbai, where he spoke at a seminar on India’s infrastructure. The country needs to spend an estimated $500 billion building roads, power grids and ports, or risk stifling growth, which has averaged nearly 9 percent annually in the last three years. American banks and financial companies have been studying the market closely, hoping to finance the investment by expanding India’s nascent bond market.