PRIME MINISTER'S SPEECH AT COLUMBIA
UNIVERSITY
"INDIA’S
ECONOMIC OUTLOOK & PERSPECTIVES ON INTERNATIONAL DEVELOPMENT"
Following is the
full text of the speech delivered by the Prime Minister Shri Atal
Bihari Vajpayee, at the Columbia University, at New York, yesterday:
"I am honoured
to be here in the oldest institution of higher learning of the
State of New York, as it enters its 250th year. I thank
Professor Jeffrey Sachs for his invitation to me. When he wrote
to me, I was particularly struck by his reference to the Global
Development Dialogue, which I have been advocating for the last
few years. The Earth Institute, which he heads, has done valuable
work on issues of the greatest concern to developing countries.
It is now pioneering a major programme of policy research on the
Indian economy.
Much has been written
and said about the Indian economy in recent years. We have seen
positive appraisals of our progress, as well as impatience at
the pace of our reforms. Investment Fund managers and credit rating
agencies have shown a cyclical pattern of "thumbs up"
or "thumbs down" to sectors of our economy over the
last decade. Our reforms have often been compared with those of
others, with both flattering and critical conclusions.
I would like to
focus today on this theme of where the Indian economy is, and
where we would like to take it in the foreseeable future.
Since our economic
reforms were launched just over a decade ago, the Indian economy
has sustained an annual average growth of over 6%. This average
actually masks much faster progress in the west and south of India,
where the growth in the nineties was comparable to that of the
Southeast and East Asian Tigers in their prime. Even though last
year was a drought year, GDP growth exceeded 4%. This year we
expect to touch nearly 7%.
Our foreign exchange
reserves are nearly US$ 90 billion and fast moving towards the
100 billion mark. The current account deficit turned into a surplus
over the last three years. This was achieved through non-debt
creating flows, so that our external debt has remained virtually
static in nominal terms. The debt servicing and debt GDP ratios
have fallen sharply. We are now repaying foreign debt ahead of
schedule. This year alone we have prepaid about US$ 3 billion.
From a food deficient
country, India has moved to a self-sufficient one. During the
current year, close to 7 billion dollars of agricultural produce
was exported. India is the world’s largest producer of milk and
among the largest producers of sugar, eggs and fish.
Though impressive,
these aggregate figures do not fully capture the quiet transformation
that is taking place at the level of enterprises and individuals.
Indian enterprises are reaching global scales in quality and output.
Corporations from all over the world are coming to India for manufacturing
or services.
India is becoming
a production base and an export hub for diverse goods, from agricultural
products to automobile components to high-end services. Indian
firms are now part of global production chains – importing sub-assemblies,
adding value to them and re-exporting them. Taking advantage of
its pool of high-quality scientific talent, international corporations
have established large R & D centres in India.
All these strengths
have resulted in a greater integration with world trade and our
trade has risen from 21 per cent to 33 per cent of our GDP in
a decade.
Information technology
is transforming rural lives. In a quiet revolution that has linked
rural credit with modern technology, 30 million farmer credit
cards have been issued in the past five years.
Our strong economic
growth is succeeding in bringing people out of poverty. 60 million
people emerged from the ranks of the poor in a six year period.
We have still a long way to go before we can eradicate poverty
in our country. However, it increasingly appears that the ingredients
of rapid poverty eradication are falling into place.
From roads to telecommunication,
we are seeing the beginning of a qualitative change and growth
in infrastructure. In the last three or four months, India has
been adding nearly 2 million mobile connections every month. The
enormous successes of our IT professionals and the new successes
of IT enabled services have been made possible by the fact that
the data and voice carrying capacity in India today is 75 thousand
times what it was just 4 years ago. We have launched an ambitious
project for a highways network, which would link our major metropolitan
centres and provide improved connectivity to our rural areas.
These roads are already transforming our economy, as your freeways
did to your economy many decades ago. Upgradation of facilities
has sharply reduced the turn-around time in Indian ports.
We have taken many
steps towards energy security. There have been 7 major finds in
4 areas in India. We have invested in oil fields abroad – in Sakhalin
in Russia with an investment of $ 2 billion; in Sudan with an
investment of about $ 1 billion; in Vietnam, Libya, Syria and
other countries.
In the field of science,
India is one of only three countries which have indigenously built
super computers and one of the six countries in the world that
builds and launches satellites. Two years ago, we launched a satellite
into geo-stationary orbit. We plan to send a spacecraft to the
moon in the next five years.
Today, India has
the confidence that the basic fundamentals of the Indian economy
are sounder than they have been for several decades. A young,
better-educated, more confident, and increasingly impatient Indian
population is driving India’s progress and demanding from government
the conditions to fulfil its aspirations.
The biggest challenge
that our economy faces is our fiscal deficit. To remedy this,
we have embarked on a transformation of the tax regime, improving
the tax collection machinery and introducing a simple and rational
tax code. We are moving towards implementation of a value added
tax. We are working towards more accurately targeted subsidies
and full recovery of user charges for infrastructure. To underline
our commitment to this endeavour, we recently passed fiscal responsibility
legislation, whereby we are required to bring down our revenue
deficit to zero within the next five years. This is a daunting
task, but we are hopeful of achieving it.
I have dwelt
on India’s economic achievements in some detail because many of
these do not capture news headlines. These achievements also show
that there is no weakening in India’s resolve to continue with
the reform process. Expanding the role of market forces is an
imperative of globalization and will remain the central theme
of our reforms.
Of course, there
has been a keen debate in our country on the pace and sequence
of reforms. This is both inevitable and desirable. Our effort
has consistently been to cushion the impact of reforms on the
poorer sections of our society. We have tried to reconcile competing
interests and to avoid sudden disruptions in our economy. We believe
that reforms following a democratic consensus are enduring, as
all constituencies are carried along with us.
It is also my
conviction that the new experience of successful coalition governments
in India has been ideal for democratic governance, balancing divergent
views and accommodating regional and sectoral interests more effectively.
India is a rare multi-cultural, multi-religious, multi-ethnic
and multi-lingual democracy in the world. We have an open and
vibrant press, free and fair elections and an independent judiciary.
This imparts stability and consistency to economic policy-making.
Where will the Indian
economy go in the future? Looking at opportunities and challenges,
I see an ever-brightening horizon.
Our software industry
has been growing from strength to strength. The competitive edge
of our IT industry will be enhanced by value-addition in software
and by our rapid advances in our hardware industry. The balance
between volumes and value will add strength to the IT industry.
Opportunities are
also multi-fold in biotechnology. Research & Development has
opened a wide avenue of growth in health support systems. Clinical
research is breaching new frontiers in medicine. Advances in biogenetics
reach out into agriculture and food-processing chains, which will
provide livelihood security for our masses.
The architecture
of our financial institutions is now comparable to the best in
the world. The securities markets are a major success story. On-screen
trading has brought security and speed to share market transactions.
Other products like interest rate derivatives, equity and commodities
futures provide a range of trade opportunities, not available
in many countries. Since India is well positioned in the time
zone between New York and Tokyo, I see India emerging as a centre
of financial transaction and intermediation. We are developing
strategies and strengthening structures to enable this. The sound
regulatory framework and availability of skilled manpower make
this goal achievable.
I have already mentioned
that Indian industry is today globally competitive. We will expand
the areas of its manufacturing excellence and widen their reach.
Finally, it is my
dream that the capabilities of knowledge that India possesses
should be converted into products of universal use. To secure
positions of excellence through a service-oriented economy and
to provide products and solutions for human need would be the
growth vision for India.
While documenting
India’s economic achievements and articulating its goals and aspirations,
I am conscious that we do not function in a vacuum. As a developing
country, India is profoundly affected by trends in international
trading and investment regimes, developments in the agenda of
globalisation and realisation of the goals of sustainable development.
We were
therefore deeply disappointed by the lack of positive outcome
on the Doha development agenda at Cancun recently. India has over
a half billion people dependent on agriculture for their food
security, livelihood security and rural development. Along with
other developing countries, we had hoped that the distortions
caused by domestic support and export subsidy in developed countries
could be corrected. The developing countries are also severely
affected by the asymmetries and imbalances of the Uruguay Round
which have not been addressed. The headlong march towards market
access by the industrialised countries denies the necessary policy
space for developing countries seeking to industrialise. At the
same time, the developing countries have been denied free access
for their trained manpower to the developed economies.
The uneven spread
of the benefits of globalisation continues to accentuate disparities.
The resources for development available to developing countries
remain far short of the needs. The Convention on Biodiversity
has failed to transfer technologies to developing countries in
return for their biodiversity resources.
As the Indian
economy motors on towards further growth and versatility, India
will also work along with developing countries to remedy the inequities
of the international economic system. We firmly believe that in
the inter-dependent world of today, it is no longer possible to
sustain islands of development surrounded by underdevelopment
and deprivation. The world needs to recognize this and take corresponding
measures.
Thank you."