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4/3/13

PM's address at the CII National Conference and Annual General Meeting : Speech : Prime Minister of India - Dr. Manmohan Singh

SPEECH
April3,2013 NewDelhi PM'saddressattheCIINationalConferenceandAnnualGeneralMeeting IamdelightedtobeheretodaytoinauguratetheCIIannualmeetingfor2013.Ihave alwaysbelievedthatbothgovernmentandbusinesshavetobepartnersinwritingthe storyofdevelopmentofthisancientlandofours,andCIIhasbeenagreatlyvalued partneroverthepastmanyyears.Asdifferentgovernmentshavesteeredtheeconomy throughthecomplextaskofimplementingeconomicreforms,CIIhasconsistentlypushed thebusinesscaseforreformsandhelpedourcountrytoachieveitsfulleconomic potential. IbenefitedgreatlyfromthispartnershipastheFinanceMinisterinthe1990sandI welcomeittodayasPrimeMinister.IthankmyfriendShriAdiGodrejforgivingmethis opportunitytosharemythoughtswithcaptainsofIndianindustry,atatimewhenIknow Industryisdeeplyinterestedinthestateofoureconomy. IlastaddressedyourAnnualsessionsevenyearsagoin2007.Thatwasjustbeforethe globaleconomiccrisis,whentheworldwasbooming,thecollapseofLehmanBrotherswas ayearaway,andIndiawasexperiencinggrowthatover9percentperannum. Circumstanceshavechangedsincethen,notjustinIndiabutallovertheworld. InmylastaddressIchosetostrikeacontrariannote.Atatimewheneverythingseemed tobegoingexceptionallywell,Istruckanoteofcaution.Isaidthatwhilewehave achievedmuch,wealsohaveagreatdealmoretodotocreateagrowthprocessthatis trulyinclusive.IalsosaidthatwhilethevisiblegrowthandprosperityofIndianbig business,includingespeciallyitspresenceabroad,wasinmanywaysaprojectionof Indiassuccess,therewasalsoneedtoreflectonthesocialresponsibilitiesofbusiness.I specificallymentionedtheneedforrestraintinthematterofpayingsalariesand conspicuousconsumption. Someofmyfriendslatertoldmethatmyremarksseemedunnecessarilydownbeatatthe time,butyouwillagreethatthesearepreciselytheissuesthatbegantoreceiveglobal attentionintheaftermathoftheglobaleconomiccrisis. Iproposetostrikeacontrariannoteonceagain.Ifthebusinessmoodwasunduly optimisticin2007,Ithinkitisundulypessimistictoday.Thisneedscorrection.Letme explain. In2007,IoftenhearditsaidthatgovernmenthadbecomeirrelevantbecauseIndiawill growat9percentwhateverthegovernmentdoes.Theconsensustodayisthatunlessthe Governmentactsswiftly,ourgrowth,whichhasalreadydecelerated,willbeperennially stuckat5percent. Naturally,Iwelcometherediscoveryonthepartofbusinessoftheimportanceof government!Moreseriously,Idobelievethattheroleofgovernmentatthisstageis indeedcrucial.Idonotbelieveourfutureis5percentgrowth.Wegrewatanaverageof about8percentinthelasttenyearsandwecangetthereagain.Andthatshouldbeour combinedendeavour.Butthiscallsforspeedyanddecisivegovernmentaction. Governmentisnottheprimemoverofgrowth.InaprivatesectorledeconomyandI repeat,weareaprivatesectorledeconomywith75%ofinvestmentbeingintheprivate sectorwhichincludesfarmers,smallbusinessesandthecorporatesectorthedriverof growthisindeedprivateinvestment.Buttheprivatesectorneedsanenvironmentinwhich
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4/3/13

PM's address at the CII National Conference and Annual General Meeting : Speech : Prime Minister of India - Dr. Manmohan Singh

enterprisecanflourishandcreatebothjobsandstimulategrowth.Itneedsan environment,whichwillensurethatthisgrowthisinclusive.Theenvironmenttodayisnot whatitshouldbe,andthatiswhattheGovernmentmustcorrect. Acorrectivestrategymustbebasedonacorrectanalysisoftheproblem.Ourgrowthhas sloweddownto5percent,whichisclearlydisappointing.Butthisisnotapermanent reductioninourlongertermgrowthpotential.AsIhavesaid,oureconomygrewat8per centoverthepasttenyears.Ifwegobackto15yearstheaveragewasalso7.5percent. Thiskindofdynamismdoesntdisappearsuddenly,andwemustprovetheprophetsof gloomaswrong.Weareseeing,Ibelieve,atemporarydownturn,whichdoeshappen. Afterall,businesscycleshavebeenarecurrentthemeofalltextbooksineconomicsinthe past.Ibelieve,wehaveseenatemporarydownturn,whichdoeshappenfromtimeto time.Wemustrecogniseitassuchandtakecorrectiveaction. Partoftheproblemisduetotheglobalslowdown,whichhasaffectedallcountries.The world,whichrecoveredwellfromthe2008financialcrisis,isstumblingbadlyoverthe secondcrisis,provokedbythesovereigndebtproblemsoftheEurozone.Growthis negativeintheEurozoneandzeroinJapan.IhavejustreturnedfromtheBRICSSummit. Brazilisgrowingattherateof1.5percent,SouthAfricaattherateof2.6percentand Russiaattherateof3.7percent.Chinahasdonemuchbetterat7.5percent,butthisis muchlowerthantherateatwhichChinawasgrowingearlier. Wecannotdomuchabouttheglobalslowdown.Wecanonlywaitfortheworldtogetback tomorenormalconditions.Inthemeantime,wehavetoacceptthatourexportswillbe weakandourcurrentaccountdeficitintheBalanceofPayments,higherthanitshouldbe. Wehavetolearntocopewiththeseproblems. Butwecanactforcefullytodealwiththemanydomesticconstraintsthathavearisen, whichmustberemovediftheeconomyistoperformatitsfullpotential. Thefirststepindealingwithourdomesticproblemsistorestoremacroeconomicbalance. Overthepastseveralyears,ourfiscaldeficitexpandedtoalevel,whichissimply unacceptable.Thisispartlybecauseofaconsciouspolicyoffiscalstimulation,whichwas followedbymanycountries. Mostcountriesthatfollowedthispolicyarenowreversingtheprocess.Wemustdoso also.ThatispreciselywhattheFinanceMinisterhastriedtodo.Hehastargeteda reductioninthefiscaldeficitofabouthalfapercentofGDPin201314andannounced continuingreductionsofthatordereachyear,upto201617.Wearedeterminedtodo everythingpossibletoachievethistarget. Imustemphasisethatthisreversalisnecessarynotjusttosatisfyinternationalfinancial analysts.Itisnecessarytoensurethatthefinancialsavingsinoursystemareavailableto supportinvestmentintheeconomyinsteadofbeingabsorbedbygovernmentdeficits.Itis alsonecessarytobringinflationarypressureundercontrol.Inflationhasbeenaproblem andthoughitissoftening,itneedstobebroughtdownfurther. Wehavealsotakencalibratedstepstowardsrationalisingfuelsubsidies.Petrolisnowfully decontrolledandthathasworkedwellwithpetrolpricesmovingupanddownwithworld prices.Dieselismovinggraduallytowardsmarketbasedpricingoverthenextfew months.ThesubsidyoutflowonLPGhasalsobeencapped.WehopethattheDirect BenefitsTransfersarrangement,basedontheAadharplatformwillensurebettertargeting ofothersubsidiesparticularlykeroseneandinduecourseothersubsidies,and preventleakages. Allthesestepshavesentamessageofseriousintentonfiscalconsolidation,whichiswell appreciatedinternationally. Fiscalexpansionhasledtoanexpansioninthecurrentaccountdeficit,whichisexpected tobearound5percentofGDP.Thisismorethantwicethetraditionalcomfortlevelofsay 2.5percent.Wecanexpectsomereductionfromthislevelin201314,reflectingthelower fiscaldeficittargetedinthisyear'sBudgetandalsothelowersubsidiesonpetroleum
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4/3/13

PM's address at the CII National Conference and Annual General Meeting : Speech : Prime Minister of India - Dr. Manmohan Singh

products.Butthisreductionwillbemodestinitially.Wemustthereforeplantofinancea higherthannormalcurrentaccountdeficitinourBalanceofPaymentsforafewyears. WefinancedaCADofover$90billionin201213withoutalossinourforeignreserves. Wewilltakeallstepstoensurethatinflowsremainstrongforthenexttwoyears.Ibelieve awellmanagedIndianeconomy,seentobebackonahighgrowthpathcanattract continuingcapitalflowsofthisorder. Restoringmacroeconomicbalanceisoneelementofeconomicmanagement.Theotheris thecreationofanenvironmentthatisconducivetoarevivalofinvestment.Thegrowth rateoftheeconomyisstronglycorrelatedwithinvestmentrate.Theprivatesectoristhe majorsourceofinvestmentinIndia.Butbothpublicandprivateinvestmentdeclinedin 201112asashareofourGDP.Thisdeclineininvestmentmustbereversed. Themostimportantthingwecandotorevivetheinvestmentclimatedomesticallyisto dealwiththemanyimpedimentsaffectingtheimplementationofinfrastructureprojects. Therearemanyprojectsthathavebeenstuckeitherforwantofregulatoryclearancesor, inthecaseofpowerprojectsbecauseoffuelsupplyproblems.Foravarietyofreasons, intergovernmentaldecisionmakinghassloweddown.Onereasonisahesitationonthe partofofficialstotakesomecriticaldecisions. ItistodealwiththisproblemthatwesetuptheCabinetCommitteeonInvestment.Itwas designedtofasttrackregulatoryclearancesforindustryandinfrastructureandtoresolve interMinisterialdifferencesattheMinisteriallevel.Iamencouragedbytheprogressthat wehavemadeinthelastthreemonthsbytheworkofthiscommittee. Inthepetroleumsector,investmentsworth$20billionforexplorationandproduction activitiesin40oilblockshadbeenheldupformanyyearsbecauseoflackofsecurity clearances.TheCCIhasmadeadifference.Clearanceshavebeengivenforfiveblocks. Wehopetoresolvesissuesrelatingtoanother31blockswithinthenexttwoweeks. Ibelievetheprogresswehaveachievedisparticularlysignificantbecausetheseblocks wereawardedmanyyearsago,butwereheldupforwantofclearances. Inthepowersector,issuesrelatingtotheNTPC'sproposed2000MWprojectin Jharkhand'sNorthKaranpuraareahavenowbeenresolved.Thisproject,tobebuiltata costofRs14,000crore,hadbeenpendingforthelast13yearsbecauseofdifferences betweentheMinistriesofPowerandCoal. TheCCIhasalsostreamlinedtheprocessesofgrantingenvironmentandforestclearances formegaprojects.Clearancesfor12coalminingprojectshavebeenfasttracked.These projectswouldadd37MillionTonnestoourannualcoalproduction.Coalminingprojects havenowbeenexemptedfrompublichearingforonetimecapacityexpansionupto25%, providedthatpublichearinghadtakenplaceearlier.Ithasalsobeendecidedthatno freshEnvironmentalClearanceshallberequiredforaminingprojectatthetimeof renewalofmininglease,ifclearancewasearlierobtainedundertheEnvironmentalImpact AssessmentNotificationof2006. Linearprojectslikeroads,railwaysandtransmissionlinespassthroughalargenumberof villages.Anumberofsuchprojectsweregettingdelayedbecauseobtainingconsentof eachGramSabhaundertheForestRightsActistimeconsuming.Suchprojectsarenow exemptfromobtainingtheconsentofGramSabhaprovidedthattherightsofPrimitive TribalGroupsandPreagriculturalCommunitiesarenotaffectedandtheState GovernmentshavecertifiedthatallrightsundertheForestRightsActhavebeen recognizedandvested.Thiswouldhelpenormouslyreducethetimetakeninobtaining ForestClearancesandwouldalsoensurethattherightsofforestdwellersarefully protected. Often,linearprojectsinvolveonlysmallstretchesofforestland.Earlierworkcouldnotbe takenupevenonthenonforestportionunlessForestClearancewasavailableforthe forestland.Now,workonthenonforestpartcanbegin,subjecttocertainconditions.
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4/3/13

PM's address at the CII National Conference and Annual General Meeting : Speech : Prime Minister of India - Dr. Manmohan Singh

TheSupremeCourt,onbeingapproachedbythegovernment,hasalloweddelinkingof EnvironmentalandForestclearancesincaseoflinearprojects.Procedureshavebeen simplifiedtoenableeasieraccesstoaggregatesforconstructionwork. TheEnvironmentalClearanceprocedureforSpecialEconomicZoneshasbeenbroughtin linewiththeframeworkprescribedforNationalInvestmentandManufacturingZones undertheNationalManufacturingPolicywhichwouldallowtheStateGovernmentsto delegatepowerstoStatePollutionControlBoardsandwouldexemptindividualunitsfrom publichearingiftheSpecialEconomicZoneasawholehadundergonepublichearing. Thisyear'sBudgethasalsointroducedsomeimportantinitiativestostimulateinvestment. Ithasproposeda15%investmentallowanceoverandabovenormaldepreciationfor investmentofRs100croreormore.Ihopeindustrytakesfulladvantageofthisforward lookingmeasure. Thebudgethasalsoproposedzerocustomsdutyforplantandmachineryforsemi conductorwaferFABsandextendedtheavailabilityofnontaxbenefitstomicrosmalland mediumenterprisesforthreeyearsevenaftertheygraduatetoahighercategory.We mustdomoreforsupportingsmallandmediumindustryasthissectorwillbethekey componentsupportstructureforlargerindustryandwillbeamajorsourceofproductive, creativejobs. Thefulleffectofallthesedecisionswillbefeltinthenextfewmonths,andIhopetheywill gofarinimprovinginvestorsentiment.Wewillcarrythisprocessforwardanddoeven moreinthecomingdays. Inadditiontosupportingdomesticinvestment,wehavegivenclearsignalsthatwe welcomeforeigninvestmentwhichhasacriticalroleinbringinginmoderntechnologyand globalisingoureconomy.EvenasourIndianindustrystepsouttoinvestabroad,wemust welcomeforeigninvestorscomingtoIndia,andusingIndiaasapartoftheirglobalsupply chain.TheliberalizationofFDIinmultibrandretail,civilaviationandotherareas,are importantsignals.WearereviewingtheFDIpolicycomprehensivelytoseewhatmorecan bedoneinthecomingmonths. TherecentlegislativemeasuresintheBankingSectorhavepavedthewayforgrantingof newbanklicencesbytheReserveBankofIndia.Thisstephasbeenlongawaited. TheschemeforFinancialRestructuringofStateDistributionCompanieshasbeennotified andseveralstategovernmentsarenowworkingwiththeMinistryofPowertotake advantageofthescheme.Thisshouldhelprestorethefinancialhealthofthepowersector toaconsiderabledegree. Theproblemoffuelsupplybothcoalandgastopowerprojectshasbeenposing problems.TheMinistriesareworkingtoreacharesolutionoftheseproblemsinatime boundmanner.Ihopewewillseeresultsinthenextthreeweeks. Otherreformmeasuresarealsobeingcontemplated.TheFinancialSectorLegislative ReformsCommitteehasmadeanumberofrecommendations,whichwillbecarefully considered.TheLandAcquisitionandRehabilitationandResettlementBillhasbeencleared bytheCabinetandwillsoongotoParliament. Indiaisayoungnationandthisgivesustheopportunityofreapingademographic dividend.Buttorealisethisdividendweneedtobuildourhumancapital,throughthe scalingupofvocationaltrainingandapprenticeships.TheNationalSkillDevelopment AuthorityandtherecentBudgetannouncementonpromotingskillbasedtrainingthrough theprivatesectorshouldhelpusinmakingouryouthworkready.Ifirmlybelievethat goodemploymentisthebestformofinclusion.Iwantindustrytoworkcloselywith governmentinpromotingskilldevelopment.Ialsourgeindustrytopaygreaterattention toofferproductivejobopportunitiestopeoplefromdisadvantagedcommunities, ScheduledCastes,ScheduledTribesinotherwordstheaffirmativeactionmustnot remainsimplyapaperexercise,butalivingreality.
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4/3/13

PM's address at the CII National Conference and Annual General Meeting : Speech : Prime Minister of India - Dr. Manmohan Singh

IhavebrieflyoutlinedthemanyareaswhereGovernmentistakingstepstoreviveour economy.IwouldurgeIndianindustrytohavefaithinourdeterminationandavoid gettingswampedbyamoodofnegativism.Oneoftheadvantagesofbeingademocracy isthatourshortcomingsandourdeficienciesarealwaysputbeforethepublic.Andthere areindeedmanydeficiencies.Corruptionisaproblem.Bureaucraticinertiaisaproblem. Managingcoalitionsisnoteasy.Buttheseproblemshavenotarisensuddenly.Theywere thereevenearlier,whentheeconomywasgrowingat8percentperannum. Wecaninmyviewgetbackto8percentgrowthevenaswetrytomakethelongerterm changesinoursystemtodealwiththeseproblems.Andwhatismore,wecanachieve growthofaninclusivekind. TherealmessageoftheexperiencewiththeEleventhFiveYearPlan,whichendedin 201112,isthatwenotonlygrewatanaveragerateof8percent,ourgrowthwasfar moreinclusivethanearlier.Povertydeclinedmuchfaster.Ouragriculturalgrowthrate accelerated.Realwagesinruralareasgrewmuchfaster.Realconsumptioninruralareas grewmuchfaster.AndthepoorerStatesofourUniongrewmuchfaster.Thisinclusive outcomewastheresultofacombinationoffastergrowthwithastructurethatbenefited ruralareascombinedwithmanygovernmentprogrammes,whichencouragedgreater inclusion. IfwediditintheEleventhFiveYearPlan,thereisnoreasonwhywecannotdoeven betterintheTwelfthFiveYearPlan. Iwouldliketoconcludebysayingthatwehaveenteredadecisivephaseinourpost independenceeconomichistory.Ifwecanreturntothehighgrowthpaththatwewereon afewyearsback,itwouldbringaboutatransformationinoureconomyintenyears generatingnewemploymentopportunitiesforouryoungpeopleandreducingageold povertytoverylowlevels. Isincerelybelievethateachoneofus,andtheworldatlarge,hasastakeinIndias economicriseasaplural,liberalandseculardemocracy.Attimeswhenourdemocratic processesfrustrateus,dorememberthatitisthisverydemocracy,thiscommitmentto pluralism,commitmenttothesefreedomsthatweallcherish,thatarethefirmfoundation ofthisancientlandsresurgenceasamodernnation. IurgeeachoneofyoutokeepfaithandcallonyoutopartnerwiththeGovernmentinour efforttoputtheeconomybackonthepathlaidoutinourTwelfthFiveYearPlan.Iwish thisconferenceandtheCIIallsuccess. ThankYou. Printedfromthesitehttp://www.pmindia.nic.in

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