|
Thank you for inviting me tonight to speak on UK-India trade and investment relations. You have asked me to focus on the infrastructure aspects. A fair amount of perspective has already been provided during our President’s recent successful state visit to the UK. She spoke both at the Guildhall and at the UKIBC Summit. Our needs and your capabilities and needs are well-known. Our effort is to ensure that our strategic partnership is firmly embedded in a strong trade and investment foundation.
India is playing a progressively larger role in the global economy. But, we are not in competition with any other economy. We are not mercantilist in our approach. Our basic growth paradigm remains anchored in domestic demand and meeting the growing social welfare needs of our population.
We approach the future with confidence. This is based on almost three decades of close to 6% growth in real terms per annum. This growth rate was over 9% in recent times and even at the height of the global financial crisis remained at around 6.7% in 2008-09. We hope to sustain this 6 to 7% growth rate in the current financial year in spite of the drought, and raise it to between 7 and 7.5% in the next financial year.
Our savings rate is around 35% and the investment rate around 38%. These are likely to be enhanced. That is the foundation on which we are confident that we can maintain and sustain a 9% plus growth rate in coming years. We have a young population that is reaching out and is willing to break barriers and boundaries. At the same time, we need a supportive global economic and financial system and a trade environment that is open. The urgent need not only in India, but in the world and in developing countries in particular, is to increase investment especially in infrastructure and to avoid protectionism. This is a formula which is as much in the interest of the developed world as it is of the developing. Investment in infrastructure in developing countries and open markets will benefit the developed world as much as it will the developing world. (The equipment for such infrastructure will necessarily come from the developed world.)
The international community came together to fight the huge impact of the global financial crisis that spread from the heart of the capitalist system and engulfed the whole world. There has been some success following the combined efforts of the G-20. At the same time, we cannot let our guard down. The so-called green shoots have to be nurtured and sustained recovery of those most affected will take time. We simply cannot go back to the old way of doing things. The world has changed and it must adapt to that change. Resources must continue to be provided in substantial measure to the multilateral financial institutions and developing countries enabled to restore their economies on a high growth path. Considering the amount spent by developed country governments on rescuing and shoring up private financial institutions, the enhanced needs of the MFIs are very small in comparison.
Let me now focus on India’s infrastructure needs. We seek investment in power and energy (conventional, non-conventional and renewable), roads, ports, airports, railways, telecommunications, etc. We seek access to technology, cooperation in R&D, development of urban centres, upgradation and expansion of our educational sector and increase in productivity in agriculture and food processing. We intend to expand health care and the special challenge is to reach high quality care to the rural sector.
We also need to create more employment. We, therefore, need a further boost to our SME sector.
Where does India-UK cooperation fit into this? The UK used to be our largest trade partner in the EU. It no longer is. Indeed, the UK’s share in India’s overall trade has declined. The UK is one of our most important investment partners but there is much more that the City of London can do in India. We may not be seen as amongst the more hassle free investment destinations but we do provide among the best returns on investment and a secure, stable and growing market. And, the hassles are on the decline and this will progressively improve. At a time when our needs are clear and your capabilities are complementary, it is time to leverage our traditional links and restore the primacy of the India-UK trade and economic partnership in Europe. In all the areas that I have listed, you have strengths. Where you do not, we can look at partnerships with third countries. We can also put to good use the skills, capabilities and outreach of the large Indian-origin community in the UK.
We are increasingly looking at the public-private partnership mode, especially in the heavy infrastructure sector. You have developed your own models in this regard and we would be happy to try them out as appropriate in India.
No doubt there are many amongst you who will want to ask about the future of economic reforms in India. It is a question I have often been asked in the six weeks that I have been here. My response has been that the process of economic reform in India has been an ongoing one since 1991. Given our democratic system, our domestic economic and social structure and the fact that the bulk of the Indian economy has since before independence and after, been rooted in the market, it is neither feasible nor necessary to go in for big bang reform at one point in time. Reform in India is and has been a process. It has support across political parties and has grassroots support. Our policy responses are designed to facilitate and nurture high growth and greater productivity while maintaining principles of equity and social justice. We are aware of the sector-specific reform demands emanating from the UK. These are not new and here too there has been forward movement even though some of you in this room may find the pace inadequate. I would not wish to argue that with you. Only remind you that our own industry finds itself constrained by many of your systems and requirements. As our partnership grows, we will find solutions to the problems of our economic operators on both sides. Needless to say, we cannot have country-specific solutions in today’s world.
India’s infrastructure requirements are huge. Meeting them will not only help India but will help revive large segments of the economies of our developed country partners such as the UK. Over the years, Government of India has announced a series of incentives to attract private sector participation and FDI into the infrastructure sectors. This is an ongoing process. Most of you who are present here today know this and I would not wish to burden you with the details. We would be happy to share these with those who are directly interested. Much of the information is also available on the internet.
We ask you to reach out and exploit the opportunities that beckon. India is a large and growing market. It is a diversified market. There is space and profit for those who have the desire to participate. Our effort will be to make your participation hassle free and productive.
Thank you for your patience.
***
|
