Arun Jaitley | India looks out3 min read . Updated: 31 Dec 2015, 10:26 PM IST
India's economic growth, now the fastest among the major economies, is poised to accelerate further
Today more than ever, to paraphrase the poet John Donne, “no country is an island entire of itself". India, too, has recognized this, becoming fully integrated into the world economy by way of trade in goods and services, as well as flows of capital, technology and ideas. And, of course, India’s uniquely large and widespread diaspora is playing a role in strengthening its ties with the world.
It is a world in which India today occupies a special position. Whereas many countries—advanced and developing economies alike—are experiencing a growing sense of economic anxiety and even gloom, India is a beacon of hope, positive change and economic dynamism.
Our economy has stabilized: inflation has fallen, the rupee’s exchange rate is steady and our commitment to fiscal discipline is solid. Economic growth, now the fastest among the major economies, is poised to accelerate further. Investors, not surprisingly, are flocking to our markets.
As proud as we are of our achievements, we also recognize our responsibilities. I am keenly aware that the Indian people have given the government in which I serve a mandate for decisive economic change and political reform. We will honour that mandate, which, in a globalized world, requires us to achieve inclusive growth domestically and engage constructively internationally.
One reason to focus on inclusive growth is that today’s Indians are different from those of the Midnight’s Children generation. Unlike that generation, the first to come of age after Independence, today’s Indians—even the poorest—overwhelmingly think of themselves as “middle class".
The 21st century Indian is younger, on average, than almost anywhere in the world. He or she is also confident and, above all, aspirational. Having seen positive change, tasted a better life and glimpsed or experienced broader opportunities, today’s Indians want more—and rightly so. Our challenge is to meet those expectations.
That is why inclusive growth is not a mantra but an existential necessity. We are a large country of many differences: class, caste, language and religion, in addition to age, gender and opinions. Differences, if preserved and celebrated, are a source of cultural richness and new ideas. But there is also a challenge. Economists have found that such heterogenous societies face greater challenges in fostering economic growth and development.
There is also greater scope for political conflict, which can challenge the pursuit of economic development. If people are different, they also tend to mistrust one another, making it more difficult to govern—potentially leading to inferior policy choices.
Achieving inclusive growth will provide the basis for India to engage internationally. The year 2015 ended with two major efforts at international/multilateral cooperation: the COP (Conference of Parties) 21 climate change conference in Paris and the World Trade Organization (WTO) negotiations to conclude the Doha Development Agenda in Nairobi. India was a constructive player in both efforts, not least because we had so much at stake.
The recent floods in Tamil Nadu are a reminder that India is especially vulnerable to climate change. We have undertaken a major effort to increase the role of renewables, to price carbon directly and indirectly, and to boost green public investment. We call upon the advanced economies to take action to price carbon, which has become especially important in the wake of the large decline in the price of oil and other fossil fuels.
Only by boosting innovation in green technologies, including green coal, can we reconcile the pressing imperative to provide energy to hundreds of millions while ensuring good custodianship of our planet.
Likewise, India’s government and people recognize that trade is an engine of growth and a source of efficiency and dynamism. Multilateralism is the best way to ensure that global markets remain open to all, not just a few. Preserving and revitalizing WTO requires successfully concluding the Doha Round.
Our goal is to ensure that our development interests, especially the livelihood of millions of farmers, are protected, and then frame an agenda that ensures multilateralism’s critical role in preserving and opening markets in the future for all countries.
Mahatma Gandhi, the father of the nation, best described how India should engage with the world. He wished “the cultures of all the lands to be blown about my house as freely as possible. But I refuse to be blown off my feet".
We don’t want India’s economy to be walled in on all sides, or our windows to be shuttered. We want the winds of external learning and experience, foreign capital, technology and entrepreneurship to blow around the Indian house. India will engage with the world with openness and receptivity, but also with the confidence that our values, rich history and promising future will keep us from being blown off our feet.
Arun Jaitley is minister for finance, corporate affairs, and information and broadcasting.
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