Tuesday, October 30, 2007

'Why The India Story Looks So Good'

The PM talked about the inevitability of reforms, benefits of liberalisation and globalisation and also about how 'India has never reneged on its international commitments'. No, he didn't bring in the nuke deal, but wonder if it would still make the Left see red

Prime Minister’s remarks at the Fortune Global Forum.
I am delighted to be here today in the presence of such an august gathering. You represent the best and brightest in global enterprise and creativity. I welcome you to a country which has itself embarked on a journey of enterprise and creativity. I hope you not only enjoy your stay here but also get a feel for the momentous changes that are taking place across the length and breadth of this vast nation. India is a nation on the move. The elephant, which has long been commented upon as being slow and sleepy, is not just wide awake but moving forward rapidly. So rapidly that it has become imperative for the global community to notice and acknowledge its emergence on the global stage as an economy that counts.

You are all distinguished and experienced CEOs of important global companies. I am sure you have done your homework on the quantitative dimensions of India’s resurgence. Your presence here in such numbers is an indication of the dynamism that exists in our country.
I would not like to go through the numbers. These are well known to you. However, it is undeniable that India is on a new growth trajectory. A trajectory where sustained economic growth of 9-10% per annum--growth rates which were considered impossible even five years ago--seems possible for many years to come. This acceleration of economic growth over the past two decades has been driven by rising investment and savings rates and by rising domestic consumption. I believe this can be sustained into the foreseeable future for two important reasons.

First, we have witnessed an unleashing of Indian enterprise in this past decade. Big corporates have gone global. Small and medium enterprises have become more competitive. A new generation of local enterprise has burst forth onto the business stage. These “children of reform”, who have benefited from our ongoing liberalisation and reform programme, are our vanguard to a new India--an India that is prosperous, equitable and just. At the same time, our growth process is based on a widening and deepening of our own domestic market. As the Indian market grows, it is creating new opportunities for businesses across the world.

Second, a demographic transition is underway in India. We are increasingly a country of young people. For many decades to come, India will be one of the important contributors to the available global workforce. However, to benefit from this greening of India, we need to invest in our people, in their education and skill building. This is an important part of our government’s development agenda. We have been able to ensure a massive increase in public funding of education, including vocational education. We hope to unleash a new revolution in modern education.

Simultaneously, we have increased public investment in agriculture, rural development and infrastructure. We are working to remove regional disparities in development; to improve the productivity of our agriculture; and, to increase employment opportunities outside agriculture. We have facilitated greater private sector participation in infrastructure through public-private partnerships. Our needs are immense. In the next five years, we need more than US$ 450 billion as investment in infrastructure alone. We see this coming from both domestic sources and from foreign investors.

Let me say with a sense of satisfaction that the numbers on economic growth are good. I compliment our economic management team consisting of the Finance Minister and the Deputy Chairman of the Planning Commission for managing the economy so efficiently.
However, I must say that we can do even better. I believe that India must do better if it has to meet its developmental aspirations and equity goals. We have to ease up the bottlenecks constraining growth. We have ambitious plans to expand and modernise our infrastructure sectors such as roads, railways, civil aviation, sea ports, energy and telecommunications. We have to ensure that the growth process is socially inclusive and generates adequate employment. We cannot rest on what we have achieved so far. We need two more decades of sustained effort and work if we are to get rid of chronic poverty, ignorance and disease which have afflicted millions of our countrymen for centuries.

As India grows, it seeks a wider engagement with the outside world, as an open market and an open society. As a nation of young people, we view the world as a planet of opportunities. We are aware of the risks associated with globalization. However, we have the confidence to utilise the opportunities being created. I believe that is the mood in India today.

We do want to be more integrated with the global economy. This is the best way to expand our development possibilities. A prosperous, stable and democratic India is good for the world. At the same time, we seek a more equitable world order. India must regain its due and rightful place in the globalised world, taking on the obligations and responsibilities that come with it, and making use of the opportunities.

Let me say without hesitation that we are committed to the successful functioning of a rule based multilateral trading system. India remains committed to the successful conclusion of the Doha Round at an early date. We do hope that the round keeps in mind the development dimension and also addresses the concerns of millions of our subsistence farmers. Trade liberalisation has contributed immensely to our economic growth and to the growth of the world economy. Lowering trade barriers both at home and abroad has helped us. Our enterprises have become more globally competitive.

More importantly, new business activities have grown in response to global opportunities. The successes of our IT, automobile and pharmaceutical sectors is living testimony to the benefits that liberalisation and globalisation have brought us. Sometimes, we do worry that at a time when we are becoming more open, protectionist voices are being heard in developed economies. The lesson we must all draw from the experience of the past century is that no country can reverse the dynamics of social, economic and technological change. Rather we must learn to cope and adapt with change.

This is precisely why India chose to join the World Trade Organization. You will recognise the fact that we have adhered to all our Uruguay Round commitments. In fact, our firms have benefited from these commitments. While we remain committed to these obligations, we must also explore ways in which developing countries can catch up in the race to modernization.

We have affirmed our commitment to the protection of intellectual property rights. However, the global community cannot afford the complete privatisation of research, of knowledge generation, especially in fields like medicine. We need to evolve mechanisms that protect intellectual property and at the same time, address the needs of the poor. With the increasing privatisation of R&D in science and technology, modern societies require new approaches to the sharing of knowledge where such knowledge is of benefit to all humankind.

What the world needs today is a new concord between private enterprise and public welfare. How do we maintain the required incentive mechanisms that encourage private initiative and enterprise, while at the same time ensure that public welfare is enhanced? This dilemma poses itself most obviously in health care.
The policies we require to incentivise new R&D must be balanced against the need to ensure availability of affordable medicines.

There are similar trade-offs we need to reflect on when we consider the problem of climate change, global warming, ecological degradation and environment policies. The developing world will continue to see per capita consumption rising in the foreseeable future. This will exert pressure on global resources. How do we balance the aspirations of the world’s poor against our shared concern about the sustainability of the growth process?

Let me assure you that we in India are deeply and sincerely committed to the protection of our environment. The Indian approach to climate change and global warming derives from the ancient Hindu saying--vasudhaiva kutumbakam--“the universe is one family”

As I had said at the G8 Summit in Germany, India accepts its global responsibilities. We are willing to accept the obligation that our per capita emissions will never exceed the per capita emissions of developed countries. If developed countries succeed in reducing their per capita emissions, this would exert pressure on us as well.

Whether it is on trade policy or on climate change, or indeed on any international obligation, India has always worked with the global community. Moreover, India has never reneged on its international commitments. India has been a reliable partner, a responsible global citizen. India respects the rule of law. India is, therefore, a predictable partner. This is what makes India an attractive destination for investors like you.

I know very well that investment is an act of faith. It is shaped by perceptions, by expectations and by all the uncertainties of life. I invite you to have faith in India. I assure you that your faith will not be misplaced.

I do sincerely believe that the success of the Indian experiment--the experiment of a developing economy seeking its salvation within the framework of an open society and an open economy, committed to the protection of fundamental human rights and the rule of law, as a plural, secular democracy--has a global relevance. Its success has a global significance. India’s success and the success of this experiment can alter the course of history in the 21st century.

The record of the 21st century has been a mixed one as far as democracy is concerned. While people across the world have rejected fascism, authoritarianism and totalitarianism, the record of democratic societies in pulling people out of poverty has not been as convincing as we would have liked it. Let us show that this is indeed possible.

All those who invest in India, who invest in its future, who invest in India’s prosperity, who invest in the capabilities of the Indian people will be investing in the future of democracy.

The beauty of Indian democracy is its vitality; its ability to periodically rejuvenate itself; its ability to reform itself. We will continue to do so. Our systems may be slow, but they are steady. We will continue to reform our systems and our institutions, so that our economy becomes more efficient and our society more equitable.

I must draw your attention to the fact that the road to such reform over the past two decades has been a one-way street. Different political parties of different ideological hues have been in office over the past two decades. Yet, no policy reform has ever been reversed. The Indian economy, and its globalisation, has moved in only one direction--towards greater and greater freedom for individual creativity, initiative and enterprise. And towards increased integration with the world economy.

That is why the India Story looks so good.This was what we dreamt of in 1991. I doubt whether Fortune would have considered hosting such an event in India even a decade ago. The fact that you are all here today is proof of your faith in the abilities of our people. Be it FDI flows, investments in our stock markets, investments in our knowledge economy, the signals are all positive. We will work to keep these positive. I hope you will remain engaged and committed to India. I wish you well.
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