Prime
minister Dr Manmohan Singh spells out priorities for development
in his keynote address at the concluding session of the
World Economic Forum's India Economic Summit on November
29 in New Delhi
I
am delighted to be here at the closing session of yet
another India Economic Summit. These summits have helped
facilitate a dialogue between government and business,
including business leaders from outside India.
Collette
Mathur, Rahul Bajaj, Tarun Das, Prof Klaus Schwab, Yogi
Deveshwarji, the Confederation of Indian Industry and
the World Economic Forum must be complimented for the
enthusiasm with which they have organised these annual
summits. I have always found the proceedings at these
summits productive and useful.
These
summits provide an occasion for leading economic thinkers,
policy-makers and industry professionals to come together,
reflect on major economic trends in India and articulate
issues that require urgent attention.
India
has come a long way since 1985, when prime minister Rajiv
Gandhi inaugurated the first India Economic Summit. These
past two decades have been a period of great change in
India, in my opinion, a change for the better. When Rajivji
spoke here two decades ago he put forth a bold vision
of a new India, a modern India, ready to burst into the
world stage, full of energy, enterprise and dynamism.
In
many ways, Rajiv Gandhi was ahead of his times. His vision
of a new wave of modernisation captured the imagination
of a new generation of entrepreneurs and professionals
in all parts of our vast country.
To
be sure, it was not smooth sailing. He had to reckon with
vested interests; he had to contend with old mindsets;
he had to convince many sceptics. He did so valiantly,
with his combination of gentleness and impatience. He
in many ways, symbolised the hopes and aspirations of
a new generation, a generation which is now leading India's
march into an exciting future, full of immense possibilities
for our billion people.
In
1991, when we were given the opportunity to carry forward
the programme of change, there were many sceptics in our
midst, and in the audience here. I recall the concerns
expressed by the "Bombay Club" about the pace
of change that we tried to pursue. The concerns were about
increased competition, the concerns were about exposure
to global market forces, about our capacity to deal with
change and about the impact on our industry and on our
economy. Some of the concerns were products of old mindsets,
some of them were ignorance of our own capabilities.
Today,
when I look back at the past two decades, I do feel a
sense of vindication. Indian enterprise has proved doomsayers
wrong. What was regarded as path breaking then, is now
regarded as the norm. The Indian economy has become more
open, more globally integrated and more competitive.
The
seekers of protection then lined up are now seeking greater
openness. Truly, times have changed; mindsets have changed;
attitudes have changed; aspirations have changed; and
our hopes for the future have also changed. Our industry
and enterprise are far more confident, competitive and
ambitious about their future and they feel that they are
second to none. This is very satisfying for all of us.
Yet,
we still have the sceptics, the worriers and the critics.
Some have genuine concerns about change, others continue
to be prisoners of the past. Today, when I look back,
I am even more convinced that I was correct to observe
in my first budget speech in 1991 that the idea of the
emergence of India as a front ranking economic powerhouse
of the world economy was an idea whose time had indeed
come.
Liberalisation
vindicated
I had then added, quoting Victor Hugo that no power on
earth can stop an idea whose time had come. I must amend
that to say that if there is any power that can still
stop this idea of a resurgent India, it is ourselves.
I believe that there are no external constraints now to
India's growth and whatever constraints are there, are
internal; constraints imposed by our polity, our social
structures, our regional imbalances, our ability to handle
inequity, and our ability to take hard, but essential
decisions.
The
last two decades have seen many ups and downs. In our
pursuit of economic growth, we have made mistakes, learnt
from them, refined our approaches and corrected ourselves.
We have realised that growth must translate into prosperity
for all. It must provide hope and opportunity for all
sections of society hope for a better future; and
an opportunity to participate and benefit from processes
of growth.
The
durability of the policies introduced in the early '90s
is no longer in doubt. There have been many changes in
government, but policies have remained stable, moving
inexorably in a particular direction, only making marginal
course corrections. We have today, a broad-based national
consensus that the process of economic development and
growth must enhance both equity and efficiency.
Our
government too, believes that processes of wealth creation
are essential for us to meet our commitment to eradicating
poverty. We are committed to creating an environment conducive
to creativity and enterprise, an environment which rewards
risk-taking and innovation. It is only through this can
we eradicate poverty and create jobs for millions of our
youth. We need growth with equity and social justice.
This is a political as well as a social imperative.
When
the UPA government came to office last year, there were
worries about the direction of our policies. There were
worries that the economy may falter and that we may sacrifice
fiscal stability. I think we have proved that the policies
of the UPA government are growth-friendly. Over the past
18 months, policies relating to investment, taxation,
external trade, banking and finance, foreign direct investment,
capital markets and small scale industries have all evolved
towards making our industry and enterprises more efficient,
more globally competitive and as free from restrictions
as possible.
We
have been fiscally prudent and macroeconomic stability
has been maintained without sacrificing essential expenditures
on social and physical infrastructure. We have a vision
of an India, which we are determined to fashion
a vision of an inclusive, prosperous, democratic, equitable
India and we are making steady progress in that
direction. The direction is clearly visible and I assure
you that we will not falter in this regard.
The
facts so far give me confidence that we are on the right
track. Our economy has been growing at an unprecedented
rate. Following an 8 per cent growth on the rebound in
2003-04, we grew by almost 7 per cent last year and we
are likely to grow by about 7.5 per cent this year. The
estimates of many economic think-tanks predict that we
are likely to average 7.5 per cent growth rate per annum
in the next four years. This is impressive in itself and
is based on current policies. It is certainly within the
realm of possibility that an appropriate combination of
policies can raise this beyond 8 per cent easily.
In
fact, we should be targeting a 10 per cent growth rate
in two-three years' time. In my view, this is eminently
feasible, if we have the expected increase in our savings
rate and arising out of a young population, if we manage
to make a quantum leap in the growth rate of our agriculture,
if investment in infrastructure provides a fresh impetus
to industry and if services continue with their impressive
performance. The problem areas are known and we are determined
to make concrete efforts to move forward on all these
fronts.
Engaged
with the global economy
On the external front, we have become actively engaged
with the world economy. Our tariff levels are coming down
and we are committed to bringing them down to ASEAN levels.
In addition to a pro-active role at the WTO, where we
are attempting to dismantle barriers to agricultural trade,
we are actively pursuing regional trading arrangements.
We have concluded free trade agreements in SAARC and with
Singapore and Thailand. We are on the verge of entering
into one with the ASEAN countries next month.
I
am certain that in the next few years, we may see the
rise of a major free trade area in Asia covering all major
Asian economies, including China, Japan and South Korea
and possibly extending to Australia and New Zealand. This
pan-Asian free trade area could be the third pole of the
world economy after the European Union and the North Atlantic
Free Trade Area and will, I am certain, open up new growth
avenues for our own economy.
Internally,
we are trying to systematically address the problem areas
where we still need to eliminate bottlenecks and unlock
their true potential. Take agriculture this is
a sector which has been under-performing in the recent
past. Agriculture is the lifeblood of our country. The
livelihood and economic well-being of the majority of
our people depend on this sector. The key to their prosperity
and the prosperity of the entire nation
depends critically on transforming and rejuvenating our
agriculture. To my mind, given this centrality of agriculture
to our economy and society, the key breakthroughs that
we have to make in our country to spread the benefits
of economic reform, lie in the area of agriculture.
While
the Tenth Five Year Plan assumed that agricultural production
would grow at the rate of 4.0 per cent, the reality is
that in the first three years of the plan, we have not
been able to ensure even 2 per cent rate of growth in
agriculture. We have made serious attempts to increase
public investment in irrigation. We are now investing
heavily in horticulture through the National Horticulture
Mission.
We
are focusing on technological breakthroughs for scaling
up yields. I am convinced that our farmers, like our industrialists
are among the best in the world and can compete with the
best. If we have faith in this, we should work towards
liberating Indian agriculture from controls that shackle
its potential. We have nudged many states into amending
the Agriculture Produce Marketing Committee Acts and removing
constraints on agricultural trade.
An
integrated food law, transferable warehouse receipts and
a forward market in commodities, along with amendments
to the Essential Commodities Act are major steps towards
having a single integrated market for agriculture in India.
I see immense opportunities for private enterprise in
the transformation of agriculture. There are opportunities
both for supplying inputs and for processing and marketing
agricultural produce. Agricultural growth is slowly responding
to our incentives and if we sustain our efforts, we may
see India becoming a new granary of the world. The private
sector must not miss out on this opportunity and must
ride the boom that I see now on the horizon.
Upgrading
infrastructure
Closely linked to the fortunes of agriculture is the condition
of our rural areas. It is essential that our rural areas
have not only basic amenities, but also infrastructure,
which can support more intensive economic activity. Rural
infrastructure must become a facilitator for integrating
our rural hinterland into our fast growing economy. We
have announced a comprehensive programme for rural infrastructure
development under the umbrella of "Bharat Nirman".
Through this time-bound programme, we will achieve a quantum
jump in housing, road connectivity, water supply, electrification
and telecom connectivity in our rural areas. We will bring
in an additional one crore 10 million hectares
under irrigation.
We
also recognise that urban areas are focal centres for
economic activity and their needs must be attended to
on a priority basis. Our cities, which shelter a third
of our population need a better future. The speed at which
urbanisation is now taking place, the day is not far off
when over 50 per cent of India's population will be residing
in urban areas. Urban areas are the nodes from which enterprise,
creativity and prosperity radiate in all directions. They
are the engines of sustained growth that can absorb the
millions of people who need to be gainfully employed outside
agriculture.
They
need infrastructure, which is world class, infrastructure,
which can cater to the needs of a rising population, infrastructure
that can propel industrial and economic growth. The Jawaharlal
Nehru National Urban Renewal Mission, which is being formally
launched later this week, will cater to the infrastructure
needs of the top sixty urban agglomerates. Through this
mission, in which the central government will invest over
Rs50,000 crore, with much more coming from states and
local bodies, we will be able to finance urban transport
projects, slum development projects and urban decongestion
projects. We have, however, linked funding to taking some
basic actions such as improving municipal bodies and their
functioning, removing land ceiling and rent control legislation
and rationalising stamp duties. I am confident that in
the coming two-three years, we will see a robust process
of urban renewal visible all over our country.
Many
of my ministerial colleagues must have spoken to you about
the challenges posed by the so called 'infrastructure
deficit'. This area, apart from agriculture, is the one
which has been gaining our attention most. We have set
up a Special Purpose Vehicle for raising dedicated long-term
funds for financing infrastructure. We have moved away
from a government-centred approach to a public-private
partnership approach.
We
have developed transparent, competitive procedures for
such partnerships, which would function on commercial
lines. We have established a viability gap funding mechanism
for making these projects commercially viable. I am certain
that we are now at the take-off point in infrastructure.
All the elements of an essential institutional framework
are now falling in place. If the private sector seizes
the initiative, the sky is the limit to what we can achieve
in this vital area of national endeavour.
The
roads sector is humming with activity. We have moved away
in the last one year from the earlier contractor-driven
approach of National Highway Authority of India to a Build-Operate-Transfer
driven approach. We expect an investment of over Rs1,70,000
crore in the National Highway Development Project programme
in the next seven years. Our airports are buzzing with
flights. There are so many players now that I often cannot
recognise the logos of airlines in our domestic airports.
Airports too are getting modernised. Mumbai and Delhi
airports are on track to be global traffic hubs, with
the Hyderabad and Bangalore airport projects providing
healthy competition.
New
private sector ports are being developed and more are
in the pipeline. The railways are not only performing
admirably in their operations, but have an ambitious freight
corridor project. This ambitious Rs25,000 crore project
will be a boon for our freight traffic. We will soon be
having more competition to Concor in container movement.
The telecom sector has anyway done us all proud and has
revealed our intrinsic entrepreneurial strengths. The
power sector continues to be plagued with complex problems,
but we are determined that we will set many things right
in the coming months. I am personally holding wide consultations
to remedy the situation in the area of power supply.
I
have often heard complaints from many corners that we
have not made progress in our FDI policy. In fact, my
own assessment is that today, we have one of the most
liberal FDI regimes in the world. We have unshackled FDI
policies in telecom, publishing, real estate and in asset
reconstruction firms in the last couple of months. The
troublesome Press Note 18 has been done away with. Barring
the financial, retailing and coal mining sectors, we are
extremely liberal in welcoming FDI. There is a group of
ministers which is examining ways of rationalising the
current FDI regime, so that there is less red tape.
Sometimes,
I do recognise our ability to create bureaucratic hurdles
in the way of enterprise. It amazes me.
I
think that as far as FDI is concerned, it is not policy,
but badly designed procedures and poor infrastructure,
which are today the most important constraint. As for
FDI in retail, we are engaged in an intellectually stimulating
exercise to understand the possibilities that exist in
opening up this sector and how best we can harness it
for our needs.
We
have to create close to 10 million jobs every year for
the next few years to meet the demand for jobs that new
generations of the workforce will seek. Most of these
jobs will be sought by unskilled labour. We have therefore,
to create employment opportunities for them in infrastructure,
in manufacturing, in trade and transport. These jobs will
be created only if we make it attractive for investors
to invest in labour-absorbing technologies and labour-using
sectors. We will try for a consensus on making labour
markets more flexible, while having credible social safety
nets.
When
I read the debate in the media on our policies, I notice
an incomplete appreciation of the steps being taken by
our government to ensure that economic growth is firmly
rooted in an equitable, just society. This is essential
if growth is to be sustained and if society has to grow
and prosper in harmony. The Rural Employment Guarantee
Act and the massive increase in investment in health and
education are a product of our realisation that in the
long run, if growth is not to splinter our society, we
must invest in the skill base of our people and in adequate
social safety nets for the less well-off and deprived
citizens of our ancient land.
We
have ambitions of being an economic superpower. This cannot
be on a base where half our people are literate; where
people do not have access to basic health facilities;
where people do not have incomes in times of distress.
In the long run, we must carry everyone along on this
road to national prosperity. This is our vision for India.
This must be your vision for India too.
The new India that was stirred in the 1980s showed that
it was ready to be different, once again. Indian enterprise
has proved to the world that it is capable of taking on
competition when it sets out to do so
In
1985, when your first Summit met, no one had even heard
of Infosys, or Wipro. No one had imagined that an Indian
would become the steel czar of the world. No one had imagined
that a Telco car would compete with the Japanese car.
We now have a track record of success in some vital areas
to feel confident that we can replicate these success
stories in other sectors. Why should we then be gripped
by diffidence?
Why
should we still live in fear of globalisation? The experience
of the past two decades should give us ample confidence,
it should give us courage, it should make us bolder, it
should make us think big. That sense of confidence must
reflect itself in bolder initiatives. It must encourage
us to be more open and less controlled. It must give us
confidence to pursue change in areas where we have shied
away from change. Be it in urban governance, be it in
rural marketing, be it about labour laws. We need growth,
we need jobs, we need incomes, we need security. The India
we dream of will provide for this. Our government is determined
to fashion such an
India. I am sure all of you will join in this new voyage
of enterprise and creativity. If not, history will judge
us harshly for not making bold to make it happen.
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