India to achieve double-digit growth in five years: Mukherjee
New Delhi, June 23, 2010
Finance Minister Pranab Mukherjee has said that he is optimistic about India's long-run growth prospects and that it was entirely within the realm of the possible that the country would break into double-digit growth within the next five years.
Addressing the India-US CEO Forum in Washington on Tuesday, Mr Mukherjee said the recovery from the global economic crisis for India seemed to be on a surer footing.
"The Indian economy has done exceedingly well in these difficult times through a combination of careful policymaking, dynamic industrial leadership and luck. Last quarter our GDP grew at 8.6% and this year my Ministry has predicated a growth rate of 8.5%," he said.
"I notice that the IMF (International Monetary Fund) has recently challenged our prediction. For once, however, I am not going to argue with the IMF. The IMF believes that the Indian economy will grow by 8.8%!" he remarked.
The India-US CEO Forum was reconstituted last year with 12 CEOs from India and the United States nominated by Prime Minister Manmohan Singh and US President Barack Obama, repectively.
This was the second meeting of the Forum, the first having been held in November last year on the sidelines of Dr Singh's visit to Washington. It is co-chaired by Mr Ratan Tata, Chairman, Tata Sons and Dave Cote, CEO of Honeywell Corporation.
Yesterday's meeting was attended by eight CEOs from each side. There was very high level government participation from both sides reflecting the importance attached by both Governments.
Apart from Mr Mukherjee, those attending the meeting from India included Commerce and Industry Minister Anand Sharma and Planning Commission Deputy Chairman Montek Singh Ahluwalia. From the US side, there were six Secretary-level representatives, who included Secretary of State Hillary Clinton, Treasury Secretary Timothy Geithner, Commerce Secretary Gary Locke, US Trade Representative Ron Kirk, Director of the National Economic Council Larry Summers and Deputy Secretary of State Jim Steinberg.
Mr Mukherjee told the Forum that India today saved and invested around 34 per cent of its Gross Domestic Product (GDP) and this was still rising. He said India's growth was coming not just from Government action but from a variety of sectors and stakeholders from all over the economy, including the private corporate sector. "To me, this multiple source growth is a sign of robustness," he said.
He said a significant part of India’s growth impulse was from the rural sector which had been prioritized in the country's developmental plans for inclusive growth. He said the focus was on innovation with a broader outreach at the grassroots level and engaging medium-sized companies in the US and India in the development process.
The Finance Minister said India offered investment opportunities in excess of $ 850 billion over the next five years. In the infrastructure sector, it envisaged investment at $ 1 trillion between 2012-13 and 2016-17, with a potential funding gap of 25-30% bridged through innovative modes of financing, he said.
He said efforts were being made to make the Government more efficient, transparent, and in step with the modern world. He metioned the draft Direct Tax Code in this context. He said he was committed to bring down the public debt as a percentage of GDP from the current level of around 75% to below 68% in three years.
"India’s fiscal health is good now and this new target will make it even better. It will also make more room for private sector borrowing and investment. Our ultimate aim is to make India a vibrant economy that attracts global capital and trade," he said.
Mr Mukherjee said the relationship with the US was one of the most important bilateral relationships for India today.
"As India pursues its developmental goals, we would like to work with the US – especially where our priorities converge, to realize outcomes that are to the mutual benefit of our peoples. We have a unique advantage which is the existence of strongest possible people-to-people linkages that any bilateral strategic partnership could wish for. We have, in our Strategic Dialogue, innovation as the principle that should guide our work ahead," he said.
He said the CEOs Forum had established itself as a bridge between the private sectors and the Governments of India and the US.
"With your leadership and vision, you have created synergies that are invaluable. The initiative to take this strong economic partnership to a new level of innovation and sustained growth is indeed welcome," he said.
"I am sure that the dynamism and energy of our private sectors and the public-private partnerships that we envision will help to take our cooperation and achievement to unprecedented heights," he said.
Mr Mukherjee said the trust that India had built up through its 100% compliance record in the safeguarding of imported technology should help it to increase its bilateral high technology trade.
"I am aware that this is presently under discussion and I would only underline that India has a record of being a trusted a customer. I am sure that our Governments should be able to work together to create the conditions for a win-win situation in advance technology trade between our two countries," he sad.
He noted the two countries had launched the Financial and Economic Partnership when Secretary Geithner visited Delhi in April this year to strengthen engagement in economic, financial and investment related issues.
He said the two countries were currently negotiating a Bilateral Investment Treaty and were committed to take further initiatives that would contribute to creating a more conducive environment for investment flows. He said the economic Ministries of the two countries had taken steps to gradually liberalize policies.
"I am aware that as captains of industry you will have a major focus on profits. I am sure you are equally aware that, as a politician, I have to keep a watch on votes. But, at the same time, all of us must have ambitions that go beyond these. Our ultimate aim has to be the well-being of human beings. We have to strive for inclusiveness not only in our individual nations and corporations but in the world and across nations. We live today in a world where all our fates are tied together. For that reason, if for no other, we have to strive together to create a better world.
"Our ambitions must go beyond the economy. India’s founding fathers had a vision very similar to what the founding fathers of the United States had. India is today a secular, democratic nation and, as a political leader of India, I am proud of that.
"To hold on to these ideals and to run to a growing robust economy means having to face lots of challenges. We must collectively rise to those challenges.
"I know that this sounds as if I am trying to reach for the stars. I want to assure you that that is exactly what I am doing. Together we must try to reach for the stars," Mr Mukherjee added.
Ms Clinton said that, as both Mr Obama and Dr Singh had said numerous times in the last 16 months, the increased cooperation between the US and India was the cornerstone of the 21st century Strategic Partnership between the two countries.
She said Mr Obama and Dr Singh had reinvigorated the CEOs Forum last year based on the idea that Washington and Delhi needed to catch up to the business and innovation cooperation that is already happening in New York and Mumbai.
She quoted a recent report which said Indian investment in the US grew by an estimated 60 per cent in 2009, to over $7 billion. That same report indicated that trade in goods between the two countries tripled between 2004 and 2008, and that since 2004 Indian acquisitions in the United States had supported approximately 40,000 jobs in the US, with manufacturing exports to India linked to another 96,000 jobs. "That’s great progress and it’s a solid base on which to build," she said.
"But I think that we are just getting started in exploring all of the ways to improve opportunities for trade and investment and foster the kind of inclusive growth that lifts people out of poverty and strengthens our democracies. We want to turn recommendations for improving access to education into reality. We want to lay the groundwork for future cooperation to fight climate change, develop clean energy solutions, and so much more," she said.
Noting that President Obama was due to visit India in early November, she said a lot of hard work was needed to translate a lot of the ideas that had been discussed into accomplishments and realities for that visit.
An official press release said the CEOs had met in a smaller format before interacting with the Government representatives.
They presented recommendations to both Governments in four core areas - Infrastructure; Clean Energy; Education and Health/Biotechnology. The Forum also discussed impediments and some breakthrough long-term ideas, it said.
According to the release, the recommendations included some interesting and ambitious ideas such as creation of an Infrastructure Debt Fund of $10 billion for development of infrastructure in India, collaboration under the National Solar Mission of India, a long-term initiative on diabetes research and treatment, linkages between educational institutions and joint research in clean energy, including bio-fuels.
Mr Mukherjee announced that, to follow up on the ideas, a committee headed by the Deputy Chairman of the Planning Commission would be formed in India to carry forward the ideas with implementable action plans.
CEOs from both sides and representatives of the two Governments agreed that there was tremendous potential and synergy in the economic partnership between India and the US. The visit of President Obama to India later this year would provide an opportunity to intensify the economic engagement and translate some of these ideas into deliverables, they felt.
Mr Mukherjee also had a separate meeting with Mr Geithner when they discussed bilateral issues and the outlook for the global economy. They also discussed the euro-zone crisis and how this would impact on the global economy. They discussed issues relating to fiscal consolidation and Mr Mukherjee suggested that fiscal exits could be staggered and be country specific, depending on market conditions in each country.
Mr Sharma met Mr Kirk separately and discussed issues relating to India-US trade relations. Mr Ahluwalia had a meeting with US Agriculture Secretary Thomas Vilsack to discuss progress in India-US Agriculture cooperation, the release added.
Photos: Courtesy: Website of Embassy of India, Washington