New Delhi, March 12, 2016
Prime Minister Narendra Modi said on Saturday that India was a haven of macro-economic stability and a beacon of hope, dynamism and opportunity and asserted that it could contribute to Asian prosperity and development by being economically strong.
Asia a ray of hope for global economic recovery: Modi
Prime Minister Narendra Modi today said that India was a haven of macro-economic stability and a beacon of hope, dynamism and opportunity and asserted that it could contribute to Asian prosperity and development by being economically strong.
"We all want Asia to succeed," he said in his inaugural address at the conference on "Advancing Asia: Investing for the Future" organised here by the Ministry of Finance and the International Monetary Fund (IMF) here.
He noted that IMF Managing Director Christine Lagarde had referred to India as the "bright spot" in the global economy and said he viewed this as a great privilege and, at the same time, a major responsibility.
Outlining India's achievements in the last few months and its priorities for the period ahead, Mr. Modi said the country had recorded major gains in macro-economic stability. "A durable reduction in inflation, steady fiscal consolidation, a comfortable balance of payments position and build-up of foreign exchange reserves are the highlights," he said.
The Prime Minister said that, in a difficult external environment and despite a second successive year of weak rainfall, India had increased its growth rate to 7.6 per cent, the highest among major economies in the world.
"We have improved our economic governance. Corruption and interference in the decisions of banks and regulators are now behind us," he said.
He said the Government had undertaken a highly successful financial inclusion programme, bringing over two hundred million unbanked people into the banking system within a span of a few months. Thanks to this, it now had the world’s largest and most successful programme of direct benefit transfers, in cooking gas. The Government planned to extend it to other sectors such as food, kerosene, and fertilizers. This has improved targeting and the quality of public expenditure, he said.
Mr. Modi said the Government had opened up nearly all sectors of the economy to foreign direct investment (FDI). He said India achieved the highest ever rank in the World Bank Doing Business indicators and reached an all-time high in many physical indicators in 2015, including the production of coal, electricity, urea, fertilizer and motor vehicles. He said these indicators also included cargo handled at major ports and the fastest turnaround time in ports; and award of new highway kilometers; software export.
He said entrepreneurship is booming, following a series of steps we have taken. India is now fourth in the world in the number of technical start-ups, after USA, Britain and Israel. The Economist magazine has called India the new frontier for E-Commerce, he said.
Mr. Modi said the Government did not intend to rest on these achievements because his agenda of “reform-to-transform” still needsed to be finished.
"Our recent budget provides a roadmap for our future plans and ambitions. Our underlying philosophy is clear: To create the climate for wealth generation and for that wealth to be spread to all Indians, especially the poor, vulnerable, farmers, and disadvantaged communities," he said.
He said the Government had increased investment in the rural and agriculture sector, because that was where a majority of India still lived.
"But our help to the farmers is not based on giving hand-outs. We aim to double farmer incomes by increasing irrigation, better water management, creating rural assets, boosting productivity, improving marketing, reducing margins of middlemen, and avoiding income shocks.
"We are introducing reforms in agricultural marketing and have launched a major crop insurance programme," he said.
Mr. Modi said that, in addition to agriculture, the Government had increased public investment in roads and railways, which would improve the productivity of the economy and the connectivity of people. Public investment is also essential at a time when private investment remains weak, he said.
He said the Government had also made other reforms that would help create wealth and economic opportunity. "Given the enormous entrepreneurial potential in the country, my motto is Start Up India and Stand Up India. The budget has provided a further boost to the ecosystem for start-ups,' he said.
He said ensuring employability of the youth was essential for the success of the Government's Make-in-India campaign.
"The Government of India has an ambitious agenda for skilling our labour force. Skill creation of the magnitude that we have envisaged, involves institution building, which we have undertaken. Now, we have a skill development programme that cuts across twenty-nine sectors and with a nation-wide coverage," he said.
Mr. Modi also provided details of India's plans to reduce the emission intensity of its GDP by 33 percent between now and 2030.
"India has moved from a regime of significant carbon subsidy to one of carbon taxes. India is one of the few countries to have a carbon tax in the form of a cess on coal. The coal cess has been doubled in the Budget of 2016-17," he said.
Mr. Modi expressed happiness that the long pending quota revisions agreed in 2010 have finally come into effect in the IMF.
"The quotas of emerging countries will now better reflect their weight in the world economy. This will give them more say in collective decisions in the IMF," he said.
"I am sure, the IMF will be able to build on this success. Reform of global institutions has to be an on-going process. It must reflect changes in the global economy, and the rising share of emerging economies. Even now, IMF quotas do not reflect the global economic realities. Change in quotas is not an issue of increasing the ‘power’ of certain countries. It is an issue of fairness and legitimacy. The belief that quotas can be changed, is essential for the fairness of the system. For poor nations to respect the legitimacy of such institutions, they must be able to aspire and to hope. I am, therefore, very happy that the IMF has decided to finalize the next round of quota changes by October 2017," he said.
Mr. Modi stressed that India had always had great faith in multilateralism and that it believe that, as the world became more complex, the role of multilateral institutions would increase.
He recalled that India was represented at the Bretton Woods Conference in 1944, which gave birth to the IMF. India’s delegate was Mr. R.K. Shanmukham Chetty, who later became independent India’s first Finance Minister.
"Our ties, therefore, are more than seventy years old. We are a Founding Member of the Asian Infrastructure Investment Bank and the New Development Bank. We are confident that these banks will play an important role in the development of Asia. The Fund has built up an immense stock of economic expertise. All its members should take advantage of this. All of us need to pursue policies that provide a stable macro economy, enhance growth and further inclusion. The Fund can be of great assistance in this," he said.
He said that, apart from advice, the IMF could help in building capacity for policy making.
"I am happy to announce a new partnership with Bangladesh, Bhutan, Maldives, Nepal, Sri Lanka, India and the IMF. We have agreed to set up the South Asia Regional Training and Technical Assistance Centre. The centre will provide training to government and public sector employees. It will enhance their skills and improve the quality of their policy inputs. It will also provide technical assistance to governments and public institutions," he said.
On the theme of the conference, Mr. Modi touched on two issues: firstly, “Why Asia?” And secondly, “How India”?
"Why is Asia so important, and how can India contribute?" he asked.
Mr. Modi pointed out that three out of every five people in the world lived in Asia and its share in global output and trade was now close to one-third. Its share in global foreign direct investment is about forty percent. It has also been one of the world’s most dynamic regions.
"Although Asia has slowed down, it is still growing at a rate three times greater than that of the advanced countries. It is, therefore, the ray of hope for global economic recovery," he said.
He said many Asian countries had relied more on developmental financial institutions and banks than on capital markets. This provides an alternative model for the financial sector, he said.
"Social stability built on strong family values is another feature of Asia’s development. Asians tend to leave things behind for the next generation," he pointed out.
Mr. Modi spoke of India's special place in Asia and underlined that it had dispelled the myth that democracy and rapid economic growth could not go together.
"India has also shown that a large, diverse country can be managed in a way that can promote economic growth and maintain social stability. One way in which we are doing this is through cooperative and competitive federalism. The states and the Centre come together to pursue common objectives. States which pursue good policies and deliver essential services for the poor, induce others to follow.
"Our rapid economic growth is also very distinct in Asia. We have never tried to gain in trade at the expense of our partners. We do not follow 'beggar thy neighbour' macro-economic policies. We have never undervalued our exchange rate. We add to world and Asian demand by running current account deficits. We are therefore good Asian and good global economic citizens, and a source of demand to our trading partners," he said.
Mr. Modi listed the various cooperative initiatives taken by India in Asia and dwelt at length on its "Act East Policy".
"Our approach to cooperation is based on flexible geometry. We have integrated in different ways and at different speeds with our neighbours in South Asia, our partners in ASEAN, and our partners in Singapore, Japan, and Korea. We intend to continue doing so.
"My dream is of a Transformed India. I lay this dream alongside our common dream of an Advanced Asia – an Asia where more than half of the global population can live with happiness and fulfillment. Our joint heritage and mutual respect, our common goals and similar policies, can and must create sustainable growth and shared prosperity," he added.