Finance minister kicks off US trip.
AB Wire
WASHINGTON, DC: Finance Minister Arun Jaitley began his five-day Washington trip on Wednesday, laying out a road map for the $2.3 trillion Indian economy to achieve double-digit growth rate.
Delivering the keynote address at a conference hosted by the Center for Strategic & International Studies here, the minister offered a laundry list of programs and measures that the government has launched that he said would help accomplish that goal.
Jaitley is Washington to attend the spring meetings of the International Monetary Fund and the World Bank Group.
The “percentage of younger working hands in India is unusually large” and it is a challenge for the government to prepare them to play a role in the economy, the minister said at the outset of his 14-minute speech at CSIS, his first public event in Washington.
Because of this unique demography the country needs to target a double digit growth rate, Jaitley said. “India growing at 5 percent, 6 percent, or even 7 percent is not an India that is going to face up to this challenge,” the minister said, adding that the country “has the potential to make that 9 to 10 percent its new normal in the years to come.”
Having the state governments play a major role in growth and development is key to achieving the target growth rate, Jaitley said. “We are strengthening all our regional and state governments,” he said.
Pointing out that in the past state governments “had to literally run to the Center for resources,” he stated that “today it’s a different ballgame altogether.”
Jaitley said “cooperative federalism” is happening in India at the moment. “In the new partnership between the Center and the States, the revenue of the states has been hugely increased so that they can invest a lot more both in social infrastructure and physical infrastructure [and] poverty alleviation schemes.”
Each state will get 10 percent more revenue from the center this year, Jaitley said. This will lead to what he termed as “competitive federalism,” where states compete with each other for investment and development.
A second component of the government’s strategy for achieving high growth rate is high investments in infrastructure, including rebuilding the national highways, according to the minister. In this year’s budge, investment on infrastructure exceeded $12 billion, he said.
Resources saved as a result of low oil prices are being invested in improving rural roads, highways and railway infrastructure, the minister said.
Manufacturing is another area the government is emphasizing on because “that’s where the jobs are going to be,” he said.
Jaitley also referred to the recent government moves to open up sectors, where India has been “conventionally conservative,” such as defense, insurance, railway infrastructure and real estate. The next step is to make investing in India more attractive by easing the process of investors, including reforming the tax system, he said
The minister said setting up industrial corridors, along the Mumbai-Delhi highway and Kolkatta-Amritsar highway, which will provide jobs to 300 million landless Indians, and building 100 new smart cities across the country will also help India achieve 10 percent growth rate.
The daylong conference, “Deepening the U.S.-India commercial Partnership: the first year of the Modi government,” featured a number of prominent speakers from the United States and India. They included Romesh Wadhwani, Chairman and CEO of Symphony Technology Group; John Hamre, President and CEO of CSIS; Assistant Secretary for Global Markets at US Department of Commerce Arun M. Kumar; Under Secretary for Economic Growth, Energy, & Environment at the Department of State Catherine A. Novelli; Richard Rossow, Senior Fellow and Wadhwani Chair in U.S.-India Policy Studies at CSIS; Gwendolyn Kopsie, Vice President for International Strategic Partnerships at Boeing; Clifford Samuel, Vice President of Access Operations and Emerging Markets, Gilead Sciences; Tarun Das, Founding Trustee, Ananta Aspen Centre; T.N. Ninan, Chairman of Ananta Aspen Centre; and Rajiv Mehrishi, Secretary, Department of Economic Affairs, Ministry of Finance.