In Delhi, Geithner lauds India’s recent reforms

US secretary of treasury Timothy Geithner said today that India’s recent economic reforms, including allowing foreign investment in retail, will help raise income levels in the country.

Speaking at the US-India Economic and Financial Partnership in New Delhi today he said the two countries should further dismantle barriers to access to each other’s economy.

“The recent reforms advanced by Prime Minister Singh and Minister Chidambaram will help provide a foundation for stronger economic growth, an increase in investment, and more widespread gains in income,” Geithner said.

The Indian central government has come under intense fire for allowing foreign companies enter the Indian organized retail market. Many local critics of the policy believe foreign companies, with their expertise and capital, will drive out smaller Indian companies from the sector.

However, India has been hit by relentless inflation in the prices of essential commodities such as food items, over the last two years. Many have blamed the inefficient and multi-layered commodity trading system in the country for the price rise, and see FDI as a way to bring discipline and control into the sector.

Besides the Indian finance minister P Chidambaram, US Federal Reserve Chairman Ben Bernanke and Indian Reserve Bank Governor D Subbarao were also present.

Among the topics discussed were “ways U.S. investors and businesses can best help contribute to India’s investment and infrastructure needs and.. the opportunities for further expansion of Indian firms in the United States and U.S. firms in India.”

They also discussed the treaty and implementation of the Foreign Account Tax Compliance Act (FATCA) to address offshore tax evasion and mutual cooperation on issues relating to illicit finance, including efforts to combat money laundering, terrorist financing, and other financial crimes.

Geithner will meet with the Indian Prime Minister later today.