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THREE years ago, in a high tide of hope, India delivered a historic political mandate to Prime Minister Narendra Modi-led National Democratic Alliance for good governance, stability, economic growth, increased opportunities and transformation in the quality of life. Since then, there is new momentum and a sense of purpose and direction.
At a time of geopolitical uncertainties, political turbulence, economic volatility and technological disruptions, India is a bright spot of growth and stability in the global economy.
Economic growth has accelerated to over 7.5 per cent per year. Despite the temporary disruption of demonetisation, done in the interest of a clean economy, the growth was 7.1 per cent in the last fiscal and will return to above 7.5 per cent as early as next year. India has emerged as the fastest growing economy in the world and most analysts predict it will remain so in the long run.
Growth is accompanied by increasing macroeconomic stability. Fiscal deficit, current account deficit and inflation rates are down, the Indian rupee is stable and foreign exchange reserves are at a record high. Foreign direct investments grew over 60 per cent in the last two years to US$63 billion in 2016, reflecting India's position as the most preferred investment destination today.
Reforms are accelerating. They range from measures that improve governance and business processes to those such as the nation-wide goods and services tax that have for the first time since independence unified India into a single market.
On almost every index of economic performance - competitiveness, innovation, ease of doing business, logistics, attractiveness as an investment destination, consumer confidence and business optimism - India's ranking is constantly improving. Among its peer group, such as BRICS, India's is the most improved performance.
In India, the present is changing rapidly. The future is filled with optimism. There are many reasons for it.
People, politics and governance
First, it's the people of India. A nation of 1.3 billion people, with 65 per cent under the age of 35 years, is on the move, eager for change, willing to pursue and participate in it, and confident about achieving it. The change in India is deriving its energy and momentum from the citizens, participating in crowdsourcing of ideas, supporting demonetisation despite personal difficulties and propagating missions like Clean India.
Second, it has translated into a political mandate that has grown in strength over the past three years and holds clear prospects for political continuity, stability and predictability. There is complete political clarity and confidence about the pace and direction of economic and structural reforms in India.
It recognises that governance reforms are as important as economic measures. We are pursuing governance that is clean, transparent, efficient, responsive and policy-driven. Citizens and businesses alike are being relieved from the burden of unnecessary laws, complex regulations and opaque systems. Decision-making, delivery of services and compliance is migrating to digital space.
State governments have a critical role in economic development and business processes. As economic aspirations increasingly determine political fortunes, states are becoming more competitive in attracting resources and jobs. Today, 29 Indian states compete on 285 parameters of Ease of Doing Business, with as many as 12 states scoring above 90 per cent in implementing reforms.
Third, economic reforms are taking place at unprecedented pace and touch all aspects of business investment and operations cycle. Doing business in India is becoming easier by the day.
Over 1,200 laws have been repealed and 7,100 measures for ease of doing business in India have been taken by central and state governments in the last two years.
India is among the most open economies in the world. Foreign investors can go into almost all industries, often with up to 100 per cent equity through automatic route. Indeed, more than 90 per cent of investments in India is through automatic route.
Establishing and registering a company is quick, with all approvals integrated online onto 24x7 eBiz portal.
Setting up businesses is becoming smoother, as state governments introduce measures on land acquisition, labour, utilities, construction permits, environmental clearances, single window and time bound approvals and easier inspection regimes.
Regulatory compliances have become easier. Labour laws have been codified into a single code; number of registers to be maintained have come down; e-filing of returns have started; self-certification has been introduced; number of documents for export and import have come down to three; Customs operate round the clock at 19 seaports and 17 airports.
The tax regime is characterised by lower tax rates, fewer cesses and exemptions, increased stability, faster resolution of tax disputes and electronic filing systems. GST is a revolutionary change in the tax system.
Resolution and settlement of disputes and exit from business are becoming easier and faster with the Insolvency and Bankruptcy Code, amendment to the Arbitration and Conciliation Act and to the act dealing with securitisation and reconstruction of assets, Commercial Courts Act 2015 and National Company Law Tribunal.
Fourth, India is now building, modernising and upgrading infrastructure at an unprecedented rate. Over the past three years, public spending on the transportation sector (highways, ports, shipping and railways) have reached US$105 billion. Pace of national highway construction has gone up from two kilometres per day in 2014 to 23 km per day now, and will reach 40 km per day by 2018. Pace of rail track addition has doubled. Metro rails in several cities, seven high speed rail projects, dedicated freight corridors, modernisation of 400 railway stations will transform the rail sector.
Seventy-six gigawatts of power generation capacity - 20 in renewable energy - has been added in the last three years. Air traffic is growing at 20 per cent; 18 greenfield airport projects have been approved. Six new major ports have been sanctioned. Port sector saw record addition of 94 million tonnes. One hundred and eleven rivers have been designated as national waterways and development of 1,620 km of waterway on the Ganges River has started.
Fifth, India's manufacturing sector, long stagnant, is rebounding rapidly under the Make in India initiative. India has moved up from the ninth largest manufacturing nation to the sixth largest. Foreign direct investment inflows since the launch of Make in India initiative has touched US$100 billion covering a wide range of sectors.
For India, small is not just beautiful, it is also the principal driver of employment, exports and innovation. The micro, small and medium enterprise (MSME) sector employs over 100 million people and accounts for 45 per cent of industrial output and 40 per cent of exports. Besides launching sector-specific modernisation and productivity programmes, the sector will benefit from reduced corporate tax rate, more attractive and flexible tax benefits and easier credit.
These benefits, as also several other incentives and supporting and mentoring mechanisms, are fuelling an explosive growth in the startup sector - the third largest in the world - under the flagship Start Up India programme.
The micro sector offers the greatest opportunity for social change and economic empowerment of the weakest and excluded. The MUDRA credit scheme that will offer US$40 billion in loans this year is doing just that; and, over 75 per cent of the beneficiaries are women.
Education and skills
Sixth, education and skills are our top priorities. Universal access and learning outcomes in schools, expansion and upgrading of higher education and a massive increase in skill development programmes will build the foundation for our nation's progress and a life of dignity and opportunity for our 800 million youth. Ten advanced Indian Institute of Skills, 100 India international skills centres and a skill centre in each of the 600 district will supplement the numerous skills centre being set up by state governments and industry support.
Seven, digitalisation is changing growth. India is undergoing the world's largest digitalisation programme anchored in biometrics-based Unique Digital Identity of 1.2 billion people and broadband network being extended to 250,000 village councils.
Digitalisation is transforming governance, delivery of services and benefits and poverty elimination efforts; bringing citizens and governments closer; putting banking, insurance and pensions within the reach of the poorest; helping farmers and educating the youth; and unleashing entrepreneurship and expanding jobs across the country.
Eight, as India becomes increasingly urban, adding tens of millions to the cities and towns, urban development is becoming both a means to transform the quality of life and a locomotive for growth. Programmes to build 100 smart cities, rejuvenate existing cities and address challenges of mobility, mass transit, services, pollution and waste will provide sustained long-term growth stimulus.
Nine, agriculture sector is receiving a level of strategic priority that it did decades ago at the time of the Green Revolution. Technology, remote sensing, internet, digitised financial system, soft credit, insurance, soil health improvement, irrigation and connectivity to markets are raising output to record levels, increasing resilience and enhancing farming income, expanding, in turn, the sources of economic demand in India.
Inclusive development and quality of life
Ten, for Prime Minister Modi, economic growth is just a means to transform lives. The marvels of digital technology and connectivity have opened new possibilities for addressing old problems. In a new era of inclusion and empowerment, over the past three years, nearly 300 million new bank accounts have opened that receive government benefits directly and are now increasingly connected to pension, insurance and credit in a seamless manner. What seemed unimaginable a few years ago is turning into reality across the vast territory of India.
It also means access of every citizen to the basics of life by the time India turns 75. It means, for example, 50 million new dwelling units so that there is roof over every head in 2022. Affordable housing projects will now enjoy the incentives of infrastructure sector, liberal tax benefits and large credit support.
Whether it is education, skills, water, sanitation, electricity or access to digital network, residents of the remotest villages are feeling the change. This is not just a moral and political imperative. It is unleashing enormous economic opportunities and growth impulses.
Quality of life is inextricably linked to clean and sustainable development. And, rooted in our heritage and our commitment to the planet's future, it informs every aspect of public policy and economic choices in India now.
Whether we look at the metrics of numbers, from spending to savings; or the underlying determinants of politics, governance, policy, demography and quality and scale of resources, this is a moment when, for India, all parameters are converging to reinforce the momentum of India's transformation. Numbers can be volatile, but precisely because the underlying determinants are positive and enduring, the momentum will sustain itself in the long run.
India's long-term progress will not only ensure the wellbeing of one-sixth of humanity, it will also provide a new engine of global prosperity and an anchor of its stability.