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P R 121251Z MAY 06
FM AMCONSUL CALCUTTA
TO RUEHC/SECSTATE WASHDC PRIORITY 0935
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHNE/AMEMBASSY NEW DELHI 0854
RUEHCG/AMCONSUL CHENNAI 0329
RUEHBI/AMCONSUL MUMBAI 0329
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RUCNDT/USMISSION USUN NEW YORK 0021
RUEHGV/USMISSION GENEVA 0027
RHMFIUU/CDR USPACOM HONOLULU HI
RUEAIIA/CIA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEHC/USAID WASHDC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHCI/AMCONSUL CALCUTTA 1138

UNCLAS SECTION 01 OF 03 CALCUTTA 000201 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EINV ECON SOCI ETRD IN
SUBJECT: TREASURY U/S ADAMS MEETS WEST BENGAL FINANCE MINISTER AND 
CALCUTTA BUSINESS COMMUNITY 
 
 
¶1.   (U) Summary:  May 2-3, 2006 U.S. Department of the Treasury 
Under Secretary for International Affairs Mr. Timothy D. Adams 
visited Calcutta as part of his trip to India for the Asian 
Development Bank's Annual meeting in Hyderabad.  During his time 
in Calcutta, U/S Adams met with West Bengal Finance Minister Dr. 
Asim Dasgupta, CEO Forum Member Y.C. Deveshwar and members of 
the Indo-American Chamber of Commerce (IACC) and the newly 
formed American Chamber of Commerce (AMCHAM).  In addition, he 
visited a micro-credit nongovernmental organization (NGO) 
Bandhan and U.S. biotechnology company Chembiotek, which is 
conducting immunology research as part of a National Institute 
of Health (NIH) USD 26 million grant.  In U/S Adams' meetings, 
business leaders and government officials highlighted the 
positive economic trends in West Bengal (WB) and East India but 
all emphasized the need for greater foreign investment in 
infrastructure.   Other areas that were seen as attractive 
investment opportunities included information technology, 
biotechnology, chemicals and petrochemicals, and mineral based 
manufacturing.  While contacts expressed positive views on the 
economic trends in India's Eastern region, they also commented 
on the importance of spreading the benefits of economic growth 
and opportunity to the poor and disenfranchised.  As one of the 
more senior USG officials to visit the Calcutta in recent years, 
U/S Adams' visit generated significant media attention.  Through 
his interactions, U/S Adams gained clearer picture of the 
economic and social developments in East India, the positive 
experience of U.S. businesses as well as corporate India's 
residual protectionism.  End Summary 
 
--------------------------------------------- ---------------- 
West Bengal Government's Perspective on Economic Development 
--------------------------------------------- ---------------- 
 
¶2.  (SBU) In U/S Adams' meeting with Finance Minister (FM) Dr. 
Asim Dasgupta, the FM stressed that West Bengal (WB) was 
experiencing rapid growth, faster than the national average, and 
it was the commercial hub for a market of 400 million people. 
However, infrastructure was the key to sustaining the state's 
economic growth rate of over 7 percent.  The road network is 
being improved in WB and the region, with projects like the 
"Golden Quadrilateral," linking Mumbai, New Delhi, Chennai and 
Calcutta and links with East Asia planned through the Trans 
Asean Highway and the Nathula Pass on the border with Tibet.  An 
elevated light rail transit system is planned to handle growing 
traffic congestion within Calcutta.  India's Planning Commission 
is presently carrying out a feasibility study for a deep-sea 
port on Sagar Islands in the Bay of Bengal, while a new airport 
financed by private investors is being proposed to handle 
increasing flights.  FM Dasgupta emphasized the importance of a 
public-private-partnership (PPP) model to develop WB's 
infrastructure, implicitly contradicting the position of the 
FM's Communist Party of India (Marxist) (CPM) leadership at the 
national level, which has opposed private investment in Mumbai 
and New Delhi airports. 
 
¶3.  (U) FM Dasgupta also reflected on the importance of power 
generation for West Bengal's future economic development.  The 
state has 7500 MW of existing capacity, which is only in slight 
deficit during the hot, peak season of demand.  The state will 
be installing additional capacity of 5500 MW of power in the 
next five years.  While coal-based power remains the main source 
of generation, a 900 MW pump water storage hydroelectric project 
in Purulia district is due to come online in early 2007.  WB is 
also planning on expanding land irrigation for the key 
agriculture sector from 69% of total area under cultivation to 
85% in the next couple of years.  To meet this target, the WB 
government has initiated the Teesta river project at a cost of 
USD 227 million. 
 
¶4.  (U) FM Dasgupta emphasized that the state's rapid economic 
 
CALCUTTA 00000201  002 OF 003 
 
 
growth should be inclusive and the benefits extended to the 
rural poor.  Therefore, the WB government hopes to improve 
delivery of primary health and education services.  He noted 
that WB's Infant Mortality Rate (IMR) is 40 per 1000 as opposed 
to the national average of 60 per 1000.  The FM added that just 
by decentralizing health services facilities in some of the 
areas in the state, the IMR fell drastically to below 10 per 
1000 in those areas.  The decentralizing policy involved greater 
involvement from local administrative officers and by 
propagating preventive practices through village and women 
counselors. 
 
--------------------------------------------- --------- 
Business Positive About Economic Growth in East India 
--------------------------------------------- --------- 
 
¶5.  (SBU) Local industry leaders echoed FM's optimism about the 
economic growth and prospects of WB and the East Indian region. 
In his discussions with U/S Adams, CEO Forum Member and India 
Tobacco Corporation (ITC) CEO Deveshwar commented favorably on 
recent trends in economic development in East India. He also was 
encouraged by the growing Indo-U.S. relationship but stressed 
that the proposed agreement on civilian nuclear cooperation has 
become a symbol of the partnership between the two countries and 
its final approval would be critical to an enhanced bilateral 
relationship.  However, Deveshwar cautioned that fundamental 
social and poverty related issues are not being fully addressed 
by the private sector economic growth.  He added India needed to 
create 9-10 million jobs annually and this was the biggest 
challenge for the country.  As a member of the CEO Forum, 
Deveshwar expressed views that were surprisingly protectionist. 
Possibly reflecting his company, ITC's future retail plans, 
Deveshwar opposed the entry of foreign retail firms such as 
Wal-Mart in India, claiming Wal-Mart had a bad reputation in the 
U.S. and its purchases of agricultural products would put added 
pressure on already suffering farmers to keep prices low. 
PricewaterhouseCoopers (PwC)-Calcutta Managing Director Roopen 
Roy, also in attendance at the meeting, countered that FDI in 
retail would enable Indian farmers to receive better farm prices 
by improving the supply and distribution infrastructure. 
Deveshwar further complained that in other sectors presently 
open to FDI, such as financial services and insurance, foreign 
companies only serviced the upper and middle classes, ignoring 
India's poor.  In the discussions, new technologies in 
agriculture, biotech, private participation in civilian nuclear 
energy, and alternative dispute redressal mechanisms (ADR) were 
identified as future areas of collaboration between US and 
India. 
 
¶6.  (SBU) The message of East India's strong economic potential 
was repeated in U/S Adams' interaction with representatives of 
IACC and AMCHAM.  The group of approximately twenty chamber 
members included such notables as Bank of America, Ernst & Young 
and Quaker Chemicals.  The corporate representatives were 
bullish about the business prospects in this region and enhanced 
links with the US.  They noted that while there is a significant 
focus on investment by US companies in IT and IT-enabled 
services, the region is also an investment destination for 
biotechnology and petrochemicals.  U/S Adams' visit to the 
office of U.S. Company Chembiotek provided a firsthand 
opportunity to see U.S. investment in biotechnology research in 
the region.  In addition, part of a USD 26 million NIH grant is 
funding Chembiotek's work in typhoid and cholera immunology 
research.  The USG funding is being used to map the genetic 
profile of diseases in India and to test the efficacy of 
existing vaccines. 
----------------------------------------- 
Poor Women Also Seek Economic Opportunity 
----------------------------------------- 
 
 
CALCUTTA 00000201  003 OF 003 
 
 
 ¶7.  (U) U/S Adams balanced his exposure to the economic and 
social development in Calcutta and East India by visiting 
micro-credit NGO Bandhan to understand the needs and 
circumstances of the society's disenfranchised.  The ability of 
the poor to lift themselves out of poverty has been hampered by 
the lack of affordable credit.  Bandhan, funded by Ford 
Foundation and other NGOs, has demonstrated great success in 
providing micro-loans of USD 40-70 to poor women.  From its 
beginning in 2002, Bandhan has grown from 2 branches in West 
Bengal to 155 and has increased its loan disbursals from USD 
60,000 to USD 17.5 million.  On time loan repayment is 99.98 
percent.  Bandhan plans to increase its number of women 
borrowers from 529,250 to 2,775,000 by 2010.  By partnering with 
the Small Industrial Development Bank of India (SIDBI) and the 
UK Department for International Development (DFID), Bandhan 
hopes to become a full-fledged bank for the poor by 2020. 
Meeting some of the women borrowers and seeing their projects, 
U/S Adams was able to see the desire by India's poor to also 
benefit from economic liberalization and growth. 
 
---------------------- 
Strong Media Interest 
---------------------- 
 
¶8.  (U) As one of the few senior USG officials to travel to 
Calcutta in recent years, U/S Adams' visit generated significant 
media interest.  Four television channels, with a combined 
viewership of 64 million people, provided primetime coverage. 
Seven newspapers, with a combined circulation of over one 
million, and two wire services published stories on the visit as 
well.  Lead English daily "The Telegraph" published a 
four-column headline "Official Visit, Stronger Ties" and 
reported, "Adams' visit to the city highlighted the 
strengthening bonds between two nations." 
--------------- 
COMMENT 
---------------- 
 
¶9.  (SBU) Comment:  U/S Adams' visit was an opportunity to 
assess the generally positive public and private sector 
perspectives on economic opportunities in Calcutta and East 
India.  It also served to highlight the expanding US investment 
and engagement with this region.  As noted by FM Dasgupta, that 
investment will be critical to WB's plans for infrastructure 
development.  The meeting with FM Dasgupta again showed the 
persistent disconnect between the CPM national leadership's 
ideological stance against private investment, and the WB 
government's more pragmatic position.  The interaction with CEO 
Forum member Deveshwar and his criticism of foreign investment 
demonstrated that some Indian corporate leaders retain their 
predilection for protectionism.  The members of the "Bombay 
Club" that encouraged and prospered under the old "Licensing 
Raj" are still not apparently convinced of the benefits of FDI 
and can with little irony, assume the arguments of the Leftists 
to question whether the poor are being left behind, to justify 
blocking foreign investors. 
JARDINE