Paulson wants to help make Mumbai a financial powerhouse

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Treasury Secretary Hank Paulson is looking a bit frazzled these days, but he isn’t exactly choosing a relaxing place to get away from all the domestic pressure about subprime mortgages and Chinese imports. He’s going to India next week with a big to-do list. In a speech Wednesday at the Council on Foreign Relations, he talked about his agenda. Here are a few highlights:

Nukes: It’s not exactly within the portfolio of the Treasury, but considering as how it’s topic #1 in the U.S.-India relationship, Paulson reiterated the Bush administration’s support for the pact. That’s all well and good, but tell that to the leftists in India, who think that the deal makes India too cozy with the United States. PM Manmohan Singh may have to scuttle the pact in order to maintain his ruling coalition.

Trade: Paulson wants India to help break the deadlock on the Doha round of trade talks. Last week, India and Brazil complained that rich countries are holding the talks hostage because they are unwilling to give ground on agriculture and manufacturing. But Paulson will try to convince India that Doha is the “most effective thing we can do to raise living standards in India and around the world” and that “we must resist protectionism.”

Economic reform: It will cost India an estimated $500 billion over the next five years to improve the country’s physical infrastructure, with one third of the funding coming from the private sector. Paulson said it was a prime opportunity for U.S. businesses to invest. Singh wants to turn Mumbai into a new financial capital of Asia, and Paulson agrees: “I believe it is the right path, considering India’s stake in global financial services.”

Paulson was also generous in his praise for India’s monetary policy. Currency flexibility and the appreciation of the rupee, he said, has allowed the country to resist inflationary pressure without sacrificing economic growth. These weren’t just words of flattery designed to extract concessions on his trip next week (although maybe they were that, too). They were also words aimed squarely at China to let its currency float too. It was a nice way of sending a message to one country while talking about another.