We’ve been lucky enough to hear the Indian Prime Ministers comments as regards India’s development today (13th March 2007) in comments to 2.6billion.com. Chris Devonshire-Ellis, of Dezan Shira & Associates, summarises:

“Dr. Singh made a provocative yet illustrating presentation over the current and future development of India in the global community. I summarise these as follows”:

1) It’s March 2007. Where is India today ? And what is the sustainability of India’s Economic Growth?

India’s economy has grown at 8% the past three years and touched 9% in 2006. In terms of domestic savings and deposits, India has also recorded rates of 32% & 34% of GDP being realised in this fashion. Accordingly we see that if India can sustain this growth - and we are taking steps to ensure this will be the case, a sustained growth rate of this magnitude will transform India and smooth it’s passage as a global player.

2) How will this be accomplished?

Those savings rates will enable us to re-invest. However we do need to reconcile current public spending with fiscal policies. Our macro-economic policies dictate that such rates will continue. Additionally, we expect a three fold increase in FDI over the next two years and this will also assist. There are weaknesses, and we recognise these. India needs to develop a long term debt market also to carry some of this, and we need to better co-ordinate public and private investment.

3) India’s democracy and it’s multi-faceted images has often meant stagnation for the country. Is this a problem?

India is the world’s largest democracy. we are proud of this, and we are a large nation. Although oppostion parties may be voiciferous in opposition, actually there is a lot of
common ground and fiscal unity on what needs to be done. There is more unity over the countries direction towards openess, transparency and welcoming of foreign investment than meets the media eye at this moment in time.

4) How about WTO entry?

We are hopeful that the current round in Doha will reach a conclusion for Indian entrance in July. These are complicated talks, and we need to be sure that developed nations do not impose unreasonable quotas upon us, especailly in agriculture. Between 35 and 50% of all rural Indians are illiterate. We truly are a developing country and we need assistance to educate. India as part of the global community is better off and the global community with that labor force is better off also if we are permitted to join. The future of low-cost manufacturing as we have seen with the rise of China, lies in Asia, not in the West.

5) India’s service industry and it’s manufacturing industries are imbalanced. How do you see this changing to a more sustainable economic model?

India has a historic reason for this, yet we must balance our economic output to protect sustainability. We must develop more manufacturing. Actually, our policies are in favour of this; we export in order to purchase imports that we need. We don’t need to create huge trade imbalances. But we do need to boost exports to buy the materials we require nto redevelop the countries infrastructure.

6) How much do you think is required in terms of infrastructure development?

We have budgetted for USD300 billion over the next few years. Funded by the increase in FDI, the increasing levels of savings I mentioned, the growth in export earnings and other domestic factors as follows:

* More favorable investment and labor policies, we are constantly evaluating these;

* India’s natural demographics, which see us with a young labour force over the next 30 years as opposed to China’s, which is aging;

* Education in workforce: We are increasing investment in education from 3.6% today to 6% in the next three years.

* As I mentioned earlier, the creation of long-term debt markets. International FDI into India just this year has been more than Institutional income for the first time ever.

7) How about security with Pakistan and China ?

The media loves to sell newsprint. Relations with Pakistan are cordial, although we have our well known differences, these are being worked on. With China we have border disputes but again, these are being discussed. It is not in anybodies interest to fall out of the global community, and although we have differences with these, and other nations from time to time these can be worked out as global solutions. India, with over 1 billion people, is part of the global community and we are working towards our integration into this world.

Prime Minister, we thank you for your time.  

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