File photo: Dr Manmohan Sigh with Barack Obama
Barack Obama's statement that the investment climate in India is "deteriorating" seems to have politically united India and raised hackles across party lines.
On Twitter, the Prime Minister's Office (PMO) pointed out that according to a recent UNCTAD report, India is the third most desirable destination for Foreign Direct Investment (FDI). "FDI inflows to South Asia turned around as a result of higher inflows to India, the dominant FDI recipient in the region.The two large emerging economies, China and India, saw inflows rise by nearly 8 per cent and by 31 per cent, respectively," the PMO tweeted.
Commerce Minister Anand Sharma said India has an "investment friendly climate", adding that Mr Obama's "perception is "different from reality". He added, "President Obama is only commenting on some difficulties investors are facing. I don't know what specific difficulties US companies are facing, but our government has been very supportive of FDI"
Suggesting that the US President is "not properly informed" about the country's strong economic fundamentals, Corporate Affairs Minister M Veerappa Moily made a strong rejoinder saying, "Certain international lobbies like Vodafone are spreading this kind of a story." The minister was emphatic that there was no crisis in India, whereas the US and other countries had faced crises, "not once but twice" in 2008 and 2010. (
Watch: Obama's FDI remarks - Has he touched a raw nerve?)
"Not even a single financial institution has collapsed in this country, whereas many such things have collapsed in US and other countries," he said.
The US President had, on Sunday, said, "In too many sectors, such as retail, India limits or prohibits the foreign investment that is necessary to create jobs in both our countries, and which is necessary for India to continue to grow... there appears to be a growing consensus in India that the time may be right for another wave of economic reforms to make India more competitive in the global economy."
The government's response to Mr Obama's statement has been backed firmly by the Opposition. The BJP took umbrage at Mr Obama saying that India prohibits foreign investment in too many sectors. The party's Yashwant Sinha, a former Finance Minister, said India could not open its markets just because the US President wished it. "If Obama wants FDI in retail and India does not want, then it won't come just because he is demanding it," said Mr Sinha.
The party's spokesperson Mukhtar Abbas Naqvi said the US President's remarks were "laughable". He added, "That country is giving us a certificate on investment and economy when it itself is facing economic problems. We have to ensure our national interests on our own."
Almost echoing the BJP was the CPI(M). "They want to open up our economy and market on their terms. For this purpose they are creating this pressure...as it is, no one believes that under the present situation, there will be any sea change in the investment scenario world over," said party leader Nilotpal Basu.
Both the BJP and the Left have opposed FDI, especially in retail, citing the interests of small traders.
"They only want their market to expand in our country," Samajwadi Party leader Shahid Siddique said. The Samajwadi Party, is extending outside support to the Congress-led United Progressive Allinace (UPA) at the Centre.
India Inc however found nothing wrong with the US President's remarks, "Obama's interview was diplomatic and measured," tweeted Anand Mahindra, chairman of the Mahindra group, one of India's largest conglomerates. "Rather than react with customary defensiveness we ought to treat it as the 'Voice of the Customer'."
It seems the US President's calls for economic reforms echo that of corporate leaders, both at home and abroad.
The UPA-II govt has seen growth slow down to below seven per cent. Gross domestic product growth for the fiscal year ending March 2012 came in at 6.5 per cent, lower than the expected 7-7.5 per cent and well below the 8.4 per cent of last year. The rupee has also fallen alarmingly, reaching a lifetime low of 57 to a dollar last month.