Following is the text of the speech of the
Prime Minister Dr. Manmohan Singh at 85th Annual General Meeting of
FICCI in New Delhi today:
“I am delighted to be with you in this 85th annual general meeting of
FICCI. It is almost five years since I was last here in this building
for a similar annual event. These have been five challenging years for
us in India and if I am a say so for the world economy as a whole. In
2008, the Indian economy had experienced five years of unprecedented
growth, registering an annual growth rate of close to 9.0 per cent per
annum. There was therefore an air of reassuring optimism all around, and
many were celebrating the India’s rise.
But some months later most countries were affected by the global
economic downturn. We weathered the impact of the trans-Atlantic
financial crisis reasonably well. India was held up as an example of
responsible and responsive economic management. But, with time the
global slowdown took its toll and we too have been impacted.
Today, we meet after a year or two of excessive pessimism at home, which
in turn has hurt the growth process. But, I stand before you to
re-assure you that our Government is committed to doing everything that
is possible to alter the policy environment, to accelerate economic
growth and to make the growth process socially and regionally more
The global economy is still passing through turbulent times. The
economic situation in Europe has been a source of concern for quite some
time. The US economy is not completely out of the woods. China too is
witnessing a slowdown. There is considerable uncertainty about when the
global economic situation will improve. However, as you have seen in
these past few weeks, our Government has acted to reverse the cycle of
negative expectations, and stimulate investment.
I wish to utilize this occasion to outline three broad themes – first,
to underline the importance of accelerating economic growth and making
the growth process socially and regionally more inclusive; Second, to
draw your attention to the measures that we have already taken towards
this end; and finally, outline steps we still need to and we intend to
We have been able to accelerate the pace of economic growth over the
last decade, with an average growth rate of over 8%. Even now, we are
the second fastest growing large economy in the world.
Our per capita levels have reached a point where India may soon be
required to graduate out of IDA, the low cost lending facility of the
World Bank. When I came into government forty years ago, IDA was an
important source of funding for us. Today we are able to extend such low
cost funding to other countries, particularly countries in the
neighborhood and countries of Africa.
While this is certainly a cause for satisfaction, I am pained when I see
the level of social and regional inequalities that continue to exist in
our country. Disparities in income and wealth cannot be eliminated
overnight or in the short run. But, disparities of the kind we have in
India, even in terms of access to basic facilities such as health,
education, safe drinking water, electricity, rural infrastructure and
even banking, is something that the nation can ill afford. The inflation
rates in the last two years have also increased to unacceptably high
levels and need to be brought down to no more than 5 to 6 percent per
The years of high growth enabled us to generate resources that have been
deployed to improve the well-being of our people. But we need to do more
to eradicate poverty, ignorance and disease from this blessed land of
ours. We need to have a growth process which is socially and regionally
far more inclusive than what we have today. That is also essential for
the long term stability of our polity and our society.
Broadening the social base of development not only improves well-being
but also widens the home market for business. Thus, equitable growth can
by itself generate more growth. A more educated and healthier workforce
is more productive. Better rural infrastructure integrates rural economy
far more effectively into the larger national economy. A healthy
agricultural economy facilitates faster growth of industry. A more
prosperous and better connected populace is a source of larger demand
and markets for goods and services.
This is why our government has committed large resources to social and
human capital development – in education, in health care, in rural
development, in housing and in rural infrastructure. It is our endeavor
to ensure that all marginalized groups and regions join the dynamic
growth processes in the mainstream economy.
Despite the challenges we continue to face, we must recognize that
poverty has declined at a pace never seen in the past two hundred years.
More effective social safety nets are falling in place. People look
forward to a brighter future for themselves and their children.
It is in this context that we should see the major drive we have
launched recently towards Direct Cash Transfers. The drive is to
transfer government benefits directly to the bank accounts of individual
beneficiaries. The Unique Identification program of having Aadhaar
numbers for all residents is going to be the basis of this huge
transformation. The government is rolling out Aadhaar based services
rapidly so that benefits like scholarships for students, pensions for
the aged, health benefits, MNREGA wages and many other benefits are
transferred directly into bank accounts using Aadhaar as a bridge. This
will reduce leakages, cut down corruption, eliminate middlemen, target
beneficiaries better and speed up transfer of benefits to eligible
individuals. It will, at one go, bring in crores of people into our
banking system and mainstream them into our economy.
Even as we make our growth process more inclusive, we cannot lower our
guard in pursuing policies that restore growth momentum to the economy.
This task has become more onerous because the global environment for
growth has become less supportive. Between 2003 and 2008, the years of
9.0 per cent growth, the Indian economy benefitted from a more benign
global environment. Since 2009 this environment has become more
challenging. As a result and also because of some domestic constraints,
economic growth rates have come down to a range of 5.5 to 6.0%. Our
export growth has declined and the fiscal and current account deficits
have gone up.
This has had a ripple effect, dampening economic growth as well as
investor sentiment. We are today seized of the need to step up
investment and savings rates commensurate with the requirements of 8-9
percent GDP growth in the 12th Five Year Plan. It is with this objective
in mind that our government has taken a series of measures aimed at
reviving investor sentiment, controlling the fiscal and current account
deficits and improving infrastructure.
Some of the decisions we have taken were politically difficult and the
naysayers and the cynics have tried to halt us in our tracks. But we had
the courage of our conviction and the interests of our people at heart.
Well targeted subsidies have an important role to play in softening the
harsh edges of extreme poverty. But, it is necessary that we all
understand that the subsidy bill, as it has grown in recent years, is
constraining the government in its efforts for the economic well-being
and empowerment of our people. Under pricing of energy, particularly
electricity and petroleum products, has greatly affected the resources
available for investments in infrastructure as well as and social
development. The subsidies on oil alone are more than what the
government spends on health and education put together. We need to
address these issues even as we ensure that the poor and the vulnerable
are effectively protected.
Last year the central government’s fiscal deficit touched a high of 5.9%
of our GDP. This was clearly unsustainable. The Finance Minister has
come out with a roadmap to reduce it to 5.3% this year and to 3.0% by
2016-17. Our government is serious about moving in this direction. Our
action in correcting distortions in energy pricing, reducing diesel and
LPG subsidies, was aimed to achieve this objective.
As challenging as the fiscal deficit has been the rising current account
deficit in the balance of payments. Given the global environment,
investors have become risk averse and global trade has slowed down. To
address this challenge we have liberalized our policy on foreign direct
investment. Our decision on Foreign Direct Investment in Multi-brand
retail, civil aviation, power-trading exchanges and broadcasting must
also be viewed in this larger context. Bills on liberalising FDI limits
in banking and insurance are currently before parliament. Each of these
decisions is based on sound economic logic. But they were also based on
larger concerns about national security and the need to insulate India
from the persistent global economic slowdown. I am afraid that those who
oppose these moves are either ignorant of global realities or are
constrained by out-dated ideologies. For example, when I hear the debate
on Foreign Direct Investment in Retail, what I hear are arguments
against large scale organized retail, and not against Foreign Direct
Investment in retail.
The steps we have taken recently are only the beginning of a process to
revive our economy and take it back to its trend growth rate of 8.0 to
9.0%. We need to complete the exercise that was begun on GAAR and
taxation of the IT sector. The day before yesterday, the Cabinet has
approved the constitution of a Cabinet Committee on Investment. This
would help in the issue of clearances for major projects in a time bound
manner. We will speed up the disinvestment process which will also
revive our equity markets.
We are bringing greater clarity the FDI policy in the pharma sector. The
Railways are working on a Rail Tariff Authority which will make fare
setting a more rational exercise. We have already put in place a package
for reviving Discoms contingent on better performance. The Direct Tax
Code and the Goods and Services Tax Bills are high on our priority. The
Land Acquisition Bill recently approved by our Cabinet with all the
misgivings that Mr. Kanodia has expressed, will soon user in a more fair
and transparent regime for land acquisition.
I have listened with great interest and respect what your President Shri
Kanodia had to say. The time is ripe once again to establishing a new
social compact between business, government and society. And our
government welcomes the constant dialogue with our captains of industry.
Five years ago, while addressing a similar conference of Indian business
I had spelt out a Ten Point Social Charter for business and government.
I do not to wish to repeat those points today but would only say that
the corporate sector must own up its responsibility in supporting
affirmative action designed to provide employment opportunities for the
under-privileged sections, persons with disabilities and our women. The
private sector should also play a more active role in the areas of
Research and Development, education and skill development, health and
I have often praised the spirit of enterprise of Indian business. For
centuries our sub-continent has been home to teachers and traders, to
artisans and peasants, to creators of wealth and knowledge. Indian
enterprise has every reason to stand tall and take pride in its
achievements. Our government will work together with captains of
industry to realize the latent growth potential of our economy.
Your association, FICCI, should feel proud that you have a talented and
a patriotic leader in Shri Raju Kanoria. I would like to compliment Shri
Kanoria, for having provided excellent leadership to FICCI over the last
one year. He has done a tremendous job, and has given valuable advice
and support to our government from time to time. I have been heartened
by his unwavering support to our policy efforts.
I would also like to note that FICCI is going to have its first ever
Lady President when Smt Naina Lal Kidwai takes over after this AGM. She
has been an icon to many young ladies in our country and has been a role
model for women to aspire to reach the top. I am sure she will steer the
ship of FICCI well in the coming year.
For my part, I assure you that our government will do its best to
promote Indian enterprise and the well-being of all our people, working
classes and other segments of our society. We are committed to a new
social compact with industry as well as with labour. This is what our
country expects and this is what to which I commit our government to
Let me therefore end by wishing you all a very prosperous and purposeful