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“Mr. Anil Agarwal, President of ASSOCHAM, the incoming President, Shri Venugopal Dhoot, Excellencies, Ladies and Gentlemen,
It is a pleasure and honour for me to attend this 86th Annual Function of the Associated Chambers of Commerce of Industry. It is a matter of pride that ASSOCHAM, born in the pre-independence era, has successfully adapted itself to the changing times and continues to be vibrant and dynamic. I understand that in this month of January alone, they are organising six events on a variety of subjects including defence industry, leadership, mutual funds, corporate taxation and education.
I wish to compliment Shri Anil Agarwal, President of ASSOCHAM and his team for their leadership, which has raised the profile of the organization.
The ambitious theme of this Conference ‘March Towards 10% Growth’ is a reflection of the paradigm shift in Indian economy and in the Indian mindset. Not very long ago, both Indians as well as foreigners used to describe the slow growth rate of India as ‘Hindu rate of growth’. Experts used to compare India unfavourably with the high growth economies including some in Asia. Today, the scenario has completely changed, and India has emerged as the “fastest growing free market democracy in the world”. What makes India’s achievement distinct is that we have managed to increase growth rate despite the large population, enormous challenges and diversity of our country.
The credit for India’s new status goes to the policies of the government, entrepreneurship of the businessmen and the new mindset of the people who have a new vision and determination to create a new India that will find its rightful place in the comity of nations.
There is no doubt that the Indian economy has undergone a fundamental and irreversible transformation. From an economy that suffered shortages of foodgrains till the seventies, we have now become self sufficient and got even exportable surplus. After having gone through embarrassingly low levels of foreign exchange reserves in the past, today we have ample reserves of 180 billion dollars. After having been an aid-recipient for many years, India has now become an aid-giver to many developing countries. From an ‘agricultural economy’, India has now transformed into a ‘service’ economy with over 50% of contribution of services to the overall GDP.
India’s economy registered an average rate of growth exceeding 8 percent during the last 3 years. In the first six months of the current fiscal year, the GDP growth was 9.1 percent, which is a record in itself. India’s industrial production grew at 10.3 percent and manufacturing sector at 11.2 during the current year (upto October), which is the fastest pace in a decade. Exports are growing at three times the growth of GDP at around 25 percent during the last four years.
Given the strong foundation of macroeconomic fundamentals and the accelerating growth in recent years, it is perfectly logical to aspire for a double-digit growth in the coming years. It is an achievable target and realizable goal.
The march of the high growth will put India among the top economic powers of the world. According to Goldman Sachs report, India could become the third largest economy in the world by 2040 in terms of GDP. But the growth is not just quantitative. India is positioned at the vanguard of the emerging new Era of Information and Knowledge Society, thanks to the IT revolution. It is in this context that India is moving up fast in the value chain of global perception.
The economic reforms have unleashed a new entrepreneurial energy and spirit. The Indian manufacturing sector, which needed protection in the past, has now become globally competitive and is seeking opportunities outside India. In 2006, the outgoing FDI exceeded the incoming FDI. Who would have imagined in the pre-reform days that Tatas would manufacture commercial vehicles in Korea, Mahindra & Mahindra would make tractors in USA, Ranbaxy would produce pharmaceuticals in China and TCS would employ 3500 people in Latin America to develop software in Spanish and Portuguese?
The Information Technology has come as a blessing to India and the Indians. The Indian IT companies have established a new benchmark and a global brand image. Today an Indian name has become a plus point in attracting venture capital in USA. There is a new recognition and respect for Indians around the world. Lakshmi Mittal and Indra Nooyi have made the global corporate world take note of the heights to which Indians could rise even in the old economy.
The youth of India who form over fifty percent of the population have become the new asset of India. The young generation has a totally new mindset with confidence and optimism, ambition and determination. They have been empowered by the IT that has enabled them to connect, communicate, collaborate and compete with the world, transcending the frontiers of nations. This asset of young human resources would fill the shortage of skilled persons expected to reach around 40 million in the developed world by 2020. The new Indian mindset is not afraid of globalization. On the other hand it is seeking opportunities arising from the globalization. Some people have started talking about “Indianisation of the Globe”.
While we are excited about the prospects of high growth and prosperity, we are conscious that the benefits of this growth should flow to all sections of the population. While we seek more growth, we also want growth for more. Inclusive growth is essential for sustainable and balanced development of the country. We need to uplift the lives of the people in the villages who form seventy percent of our population. There is need for a second generation Green Revolution. Agriculture has to be transformed from subsistence model to a sustainable business model with value addition from food processing, supply chain, cold storage and marketing. The government is investing in rural development improving infrastructure, connectivity, education and health care. The panchayati raj has empowered the rural folk who have shown a sense of responsibility and vision for the development of their villages. The reservation of one third of local body administrations for women has added a new force for development of homes and communities in the rural areas.
We are glad to note that the corporate sector also shares the Government’s perspective and has started focussing on business in the rural areas. The bottom of the pyramid is seen by the corporates as a new business opportunity.
The other concern in the context of the high growth is environment. We should ensure that the rapid growth is environment-friendly and sustainable. We have to protect the quality of air and water and maintain the equilibrium of nature.
If the economy grows by ten percent, there will be corresponding growth in energy demand. But our energy situation does not look good. We are at present importing seventy percent of our crude oil requirements at a high cost. We need to intensify our efforts to make use of non-conventional energy resources including bio fuels, wind energy and solar energy. We should look at the example of Brazil, which has reduced oil consumption and pollution through the use of ethanol as fuel. Our companies should go out and acquire oil and gas assets abroad. They should also acquire mines, forests and agricultural land in Latin America and other areas where such resources are available.
I mentioned earlier that human resource is our major asset. But to make use of this asset for higher growth, we need to invest in and reform our elementary and secondary education. While some of our higher educational institutions have become world class, much needs to be done to improve the school education.
Another challenge for high growth is the infrastructure bottleneck. Conscious of this, the UPA government is giving priority to expansion and modernization of roads, ports, airports and utilities. Given the magnitude of the cost and work, we believe that public-private sector partnership is essential for this task.
Excellencies, Ladies and Gentlemen,
In my current capacity as the Minister of External Affairs, I would like to mention the role of the External Affairs Ministry in the growing business engagement of India with the world. We call it as Economic Diplomacy. The Ministry and the network of Indian Embassies around the world facilitate and promote India’s economic and commercial interests abroad. The Indian diplomacy works in partnership with the Indian business, Chambers of Commerce and Industries such as ASSOCHAM, contributing to the global agenda of Indian business. The Ministry of External Affairs works closely with the Commerce Ministry in promoting business with markets of developing countries through Focus-Africa, Focus-LAC, Focus-CIS and Focus-Asean programmes. The Government of India has granted over a billion dollars of Lines of Credit to other developing countries, as part of its policy of development partnership. This has helped the entry of Indian companies in the markets of these developing countries. I take this opportunity to invite the Indian business to work in partnership with our Economic Diplomacy in achieving our common economic goals. I especially invite ASSOCHAM for collaboration with our Ministry, in the same way as CII and FICCI are cooperating with us in organization of business events and projects.
In conclusion, I wish the ASSOCHAM continued success in their mission. I share your optimism that we could achieve ten percent growth, if we put our act together.
Thank you.”
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