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Speech by the Minister of External Affairs Mr. Pranab Mukherjee, at the Pravasi Bharatiya Divas on "Developmental Challenges of the States: Partnership Opportunities"

New Delhi
January 8, 2007

My colleagues from the Cabinet,
Chief Ministers, 
President CII, Shri Seshasayee, 
Ladies and Gentlemen, 

I am happy this morning to be in the midst of this distinguished gathering of overseas Indians from across the world. The observance of Pravasi Bharatiya Divas in the first week of January has gained a prominent place on all our calendars. There could probably not be too many better ways to begin a new year than such an occasion that provides us the opportunity to meet, compare notes and generate fresh ideas that all of us gathered here could harness to mutual benefit. The overseas Indian community today constitutes a significant economic, social and cultural force in the world. In the recent past, the community has also made its presence felt by gaining positions of political leadership and public authority. Professionals and business leaders of Indian origin are already playing a role in the economic growth story of India. I have no doubt that this role will continue to strengthen and grow in the future. 

I am also happy that the Chief Ministers of ten major states are participating in this plenary session. To my mind, this session and the next in which the state Chief Ministers interact with all of you are perhaps the most important part of this conference. The states of India today constitute the theatre of India’s development effort. State Governments are at the cutting edge of this effort and their agencies are the ones most closely involved in it. While the pace of development in different states has been varied, there is no doubt that, if the benefits of growth are to reach larger and larger sections of our population, all the states of India will need to redouble their efforts and fashion their policies accordingly. 

Ladies and Gentlemen: 

India stands at a definitive threshold insofar as her developmental experience is concerned. All the ‘miracle economies’ that demonstrated phenomenal growth and prosperity and today rank as major economic powers in the world made that transition when the size of their working age population as a proportion of the national population was the highest. Over the next decade, India’s demographic structure will be a similar one. Even today, India is a country of young people, with 54 percent of its population in the age group below 25 years. This will be a time when it will have the potential to dramatically enhance labor supply and productivity. It will also have the ravenous appetite to maintain high rates of saving and investment that only a ‘young’ work force can. 

There is a caveat, however. In the ensuing years, we will have to invest in considerable measure in social and human capital, in innovation and in physical infrastructure as well. The future growth prospects for the country will be predicated substantially on what the states of India do over the next decade. There is, clearly, a need to ensure that good governance and fiscal prudence are brought center stage. 

Many factors work in our favour as we seek this outcome. We are an outstanding example of a large working democracy. Home to over a billion people, India with 28 states and seven union territories is also an example of a successful federation. The rest of the world sees India as a continent, if not in size, surely in the diversity of its people and its numerous contrasting states. We are also firmly set on an impressive economic growth trajectory of around 9 % per annum. Experts estimate that in a decade from now, India is likely to be the third largest economy in the world. A significant proportion of world’s output in areas such as information and communication technologies, automotive manufacturing, light engineering, biotechnology and pharmaceuticals is likely to be generated in India. 

Most of what we witness today would not have been possible without the reform process initiated in 1991, by a Government with which I was then associated. Although Governments of different political parties held power in between, the reform process has continued. This is because rapid growth is essential to raise the incomes of the mass of our population to bring about a general improvement in living conditions and to generate the resources needed to provide basic services to all our people. 

As we approach the Eleventh Plan, we are fully conscious of the fact that the economic growth so far has failed to be sufficiently inclusive. Agriculture lost its growth momentum after the mid-1990s. Employment generation continues to be slow. Far too many people still lack access to basic services such as health, education, clean drinking water and sanitation facilities. Women have increased their participation in the workforce but continue to face discrimination and are subject to increasing violence, one stark example of which is the declining sex ratio. 

With this in view, the 11th Plan is being designed to reduce poverty and focus on bridging the various divides that continue to fragment our society. It will seek to reduce disparities across regions and communities by ensuring access to basic physical infrastructure as well as health and education services to all. It will recognize gender as a cross-cutting theme and commit to respect and promote the rights of the common person. It will also reach out to many groups that may still remain marginalized. These include adolescent girls, the elderly and the disabled who lack family support, children below the age of three and others who do not have strong lobbies to ensure that their rights are guaranteed. 

As I said earlier, there is little doubt that future prospects for economic growth in the country will depend in large measure on all the States acting in tandem and all performing reasonably well. While Government of India has been consistent in reforming and liberalizing, the States in India have shown wide variance in adapting to the changes. Some States have been quicker and more responsive than others. As a result these States have grown faster than the others, and continue to do so. If this trend persists, the lopsided development within India could pose grave problems for the country in the future. Therefore, it is essential that the States lagging behind carry out the needed reforms so that they can attract investments which are essential for growth and poverty alleviation. 

In this context I am thankful for the stalwart response of the overseas Indian community to India’s call to be a catalyst for development and contribute in nation-building activities back home. The creation of the Ministry of Overseas Indian Affairs by the Government acknowledges the fact that this community will be an important partner in the emergence of India and play a role similar to the one being played, for example, by overseas Chinese in the growth of China. You have the knowledge, expertise, experience and capital and can contribute in a big way towards not only enabling India to be on the path of development and reforms, but also towards balanced development within India. 

I would accordingly appeal to all the State Governments to create a conducive atmosphere within their respective States so that interested overseas Indians and companies run by them are attracted to be part of the development process through the now very successful public-private partnership model. State Governments should take specific initiatives and devise their own strategies to benefit from the creativity, the talent, the enterprise, the enthusiasm and the commitment of the members of the overseas Indian community. 

Ladies and Gentlemen: 

Let me mention a few broad areas where the potential for such partnerships exists. I would focus first on the social sector. There is an urgent need in India for developing participative models for sustainable development in the rural areas. I know most of you still have very strong links with the soil of this land and can work out public-private partnerships to transforms lives and rural economies. Civil society organizations in India have gained strength and are trying new experiments to reach sections of society that have hitherto not seen the fruits of growth and remain vulnerable. I see a great role for all of you in bridging the digital divide and taking basic services like education, health, drinking water and sanitation to our villages. 

Secondly, there remains a large infrastructure deficit in the country. For example, Indian ports still take a much longer time to make a turnaround than some of our neighbouring countries. The condition of our highways, airports, transport and most of all, urban infrastructure, conveys the same story. There is an urgent need for aggressive investment to improve the country’s infrastructure through higher levels of foreign direct investment and technology infusion. According to UN statistics, while FDI inflows to India have risen by more than 20% to reach $6.59 billion in 2005, this remains a fraction of the total global foreign investment of $916 billion. There is definitely a lot of scope for investment in infrastructure for our friends from overseas. 

Thirdly, a large proportion of India’s population continues to depend on agriculture for its livelihood. Unfortunately, as statistics reveal, the contribution of agriculture towards India’s GDP has been declining over the years. The negative fallout of this, like suicides by farmers, is a worrisome trend. Surmounting the vagaries of weather and processing and marketing of agricultural products at remunerative prices are the main problems for the Indian farmer. There exists immense potential for investments in irrigation, food processing and marketing of agricultural products and I feel many of you would have the advantage of understanding better the cultural moorings of the Indian farmer. 

Fourthly, given its demographic structure, educational requirements in India are stupendous. Many States of India have yet to achieve even a 70% literacy rate. To ensure that a young India is able to keep pace with globalization, education is of critical importance. While Government has taken several measures through policy and legislative frameworks, there is need for all of us to work together for ensuring and enhancing the quality as well as broader coverage of education for all Indians. 

Fifthly, our competitive edge needs to be maintained and enhanced. India’s competitive advantage has been on account of the highly skilled manpower that the country has been able to produce. Many sitting in the audience are shining examples of this, of whom we are very proud. More investment in research and development (R&D) and providing more opportunities for innovation and technology development will enable us to harness the full potential of our skilled man-power. Some of our friends from overseas are in a position to bring together the R&D efforts of the countries in which they reside with those of India for better synergy for both sides. 

Finally, for a growing economy, and for a country of India’s size, energy security assumes great importance. Not only are cleaner and renewable sources of energy required to be tapped, efficiency in the existing use of energy is essential to release additional amounts for development purposes. New and innovative methods of addressing the energy deficit become important. Our friends from overseas, having the knowledge, expertise and experience in this area, can contribute immensely in meeting the requirement of energy security in India. 

I hope that after this plenary session, representatives of the various State Governments present here and our distinguished overseas friends would be able to work out meaningful partnership roles for the development requirements of the States. My Government is always present to provide the helping hand. 

Thank you.