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Keynote Address by Ambassador Meera Shankar at Emory University's Emerging India Summit on 24th February 2011 "Why India Matters"

 I am delighted to be here today at the Emerging India Summit of the Emory University and to have the privilege of speaking to you on the interesting subject why India matters.

2. It can be said that India has always mattered even from historic times.  As one of the ancient civilizations of the world, India made significant contributions to the advancement of human thought, be it in the realm of religion or philosophy, mathematics or literature.  Mark Twain described it, as the “cradle of the human race, the birthplace of human speech, the mother of history, the grandmother of legend, the great grandmother of tradition…..”  Allowing for some literacy exaggeration, he got the big picture right!

3. Today India matters because of the democratic values it stands for and the economic transformation it is undergoing, which not only brings hope for a better future for its one billion plus people but could become an anchor of stability and opportunity for the global economy.

4. When India became independent in 1947, two hundred years of foreign rule had reduced it from being one of the largest economies of the world to one of the poorest countries.  In addition there was both social and political fragmentation. Yet even in the face of such grave circumstances India decided to opt for universal adult franchise and fostering political pluralism. Given the experience of almost every other post colonial country with constitutional change, this decision was a revolutionary one and much ahead of its time. The democracy that was chosen by our leaders was radical in other ways as well.  It not only safeguarded fundamental rights and freedoms but also provided that there would be no discrimination on ground of  caste, creed or gender and granted equal rights to all its citizens. It was also perhaps unprecedented in history that such a large mass of people were shaped into a single political entity and a thriving, vibrant and secular democracy.

5.  Today India is among the few countries which became independent in the mid-20th century, which has sustained an unbroken democratic tradition.  It is the world’s largest democracy with an electorate of more than 700 million people. When India goes to elections as it did two years ago in 2009, it is a spectacle that is watched eagerly across the world, not only because of the massive scale  and colour of the exercise, but more importantly because of the message it conveys of governance based on the choice and will of the people.

6. India is a land of incredible diversity. Like the United States it celebrates pluralism. It not only tolerates diversity but has embraced it and has allowed people from all walks of life to flourish and realize their full potential. This is a tradition that is rooted in our civilization. Throughout our history peoples from other parts of the world have come to India and made it a home, resulting in a multi-cultural and multi-religious society, one where individual faith and belief is not only respected but adds to the overall sense of nationhood. Today the fact that we have a woman Head of State, a Sikh Head of Government and a Muslim Vice President is perhaps the best statement of the multi-ethnic and multi-religious nature of our state. To an outside observer, sometimes our democratic processes may seem messy, or turbulent. However our democratic structures, our habit of respecting diverse views and working together to find solutions in a process of democratic accommodation and give and take provide us institutional stability and give us the confidence that we will ultimately be able to overcome our social and economic challenges.

7. I had alluded a while ago to the fact that India is today the world’s largest democracy. India’s sheer size and its human capital are two other aspects that I would like to touch upon. With a population of more than 1.1 billion people India is already the second largest country in the world. The population is likely to continue to grow though at an increasingly slower rate and is likely to stabilize at 1.5 billion by 2050. We are likely to surpass the population of China by about 2030. The sheer number of people representing one sixth of humanity implies that whatever India does, be it in terms of social or economic development, will have an impact globally. The choice that Indians make or do not make, the products they consume, the ideas they embrace will not only have significance within India but in the wider world. Further, given the fact that India remains a large developing country, instances of successful programmes in various areas in India could very well be relevant in other parts of the world where there may be similar conditions.

8. Our population growth rate has now fallen to 1.2 per cent.  The fact that we have pursued our population policies within a democratic framework has meant a slower demographic transition.  Today the median age in India is just over 25 years and a vast majority of our population is less than 65 years old. This implies that over the next several decades we would continue to see a rise in our work force which would also provide the critical energy and dynamism to sustain our high economic growth path. India already has a large pool of skilled workers including highly skilled professionals like engineers and doctors. The existing pool is also increasing rapidly with reports estimating that annually more than 3 million graduates and 300,000 engineers join the workforce. What this means is that Indian companies can work with other international companies in partnership to better synergize their respective resources. We have already seen this in the Information Technology sector, where multinational firms have been able to benefit by utilizing the services of India’s skilled workforce, and increase their profitability and competitiveness. While there is some misapprehension in the US that this leads to job losses, this is not borne out by facts. As President Obama noted in his remarks in Mumbai during his visit to India last year these are old stereotypes, which ignore today’s reality that increased economic interaction between India and the United States can be a win-win proposition for both of us.

9. A second significant implication of these statistics is that India also represents a rapidly growing market. We have today a large and growing middle class. While estimates of its size vary from 50 million to 300 million people, what is true is that this is the fastest growing segment of our population. And if the Indian economy continues on its high growth trajectory as it is predicted to, it also means that there would be a continual increase in the disposable incomes of this population. As the numbers of working persons increase over the next two decades this would also result in greater demand for all kinds of goods and services. A study by McKinsey predicts that if India continues on its current economic growth the income levels of population will almost triple, and India will climb from its position as the twelfth-largest consumer market today to become the world's fifth-largest consumer market by 2025. Such developments will create major opportunities for both Indian and multinational companies alike. Businesses that can meet the needs of India's aspiring middle class, keep price points low to reflect the realities of Indian incomes, and adapt to a fast changing market environment will find substantial rewards in India's rapidly growing consumer market.

10. A case in point is the fast growing mobile telephony market. Today India is the world fastest growing market for mobile telephony. The number of active mobile telephone subscribers now is poised to reach 800 million. What is remarkable is that this growth in numbers has happened over the last 8-10 years. Mobile telephony was introduced in the country about 15 years ago but was seen initially as a luxury. In 2002 for instance the number of mobile phone subscribers in India was just about 20 million. Today it is no longer seen as a luxury but an essential tool for communication, changing ordinary people’s lives in far-flung villages as in teeming cities.  

11. A growing population also implies that government will need to invest in improving and further developing essential services so that we can reap the advantage of the demographic dividend. These would include delivery mechanisms in both urban and rural areas including public infrastructure, development of new educational and training facilities for our young population to impart them the necessary skills and upgrading our health care systems. In each of these areas the government is making efforts to rapidly increase our capacities. However government’s efforts alone would not be sufficient and we are increasingly working with the private sector both in India and outside to provide the necessary resources. For instance for development of infrastructure including building of new roads, ports, airports and augmenting our power generation capacities, it is estimated that we would require an investment of close to US $ 1.7  trillion over the next decade. This represents a huge economic opportunity for our international partners.

12. India’s growth story is not only a reflection of the new dynamism of a young India, but it is also a reaffirmation that the values of democracy, pluralism and the rule of law can sustain high economic growth. India is at present the second fastest growing economy in the world. Since the 1990s the average growth rate has been more than 6% and it reached close to 9% during 2004-07. There was a dip in the growth rate in 2008 due to the global economic crisis, but we are fast reverting to our high growth path. In 2010, the Indian economy rebounded robustly from the global financial crisis - in large part because of strong domestic demand - with growth expected to be around 8.5% in the present financial year that ends next month and similar levels expected to be sustained in 2011. Today we are already the fourth largest economy in purchasing power parity terms and if we sustain these high levels of growth we are likely to become one of the three largest economies in real terms as well in the decades ahead. Thanks to continued economic growth we have also been able to make progress in reducing poverty which we hope to accelerate.

13. A key feature of our economic growth is that it is fueled by expansion of domestic demand, backed by rising urban and rural incomes, and a sharp rise in savings and investment rates. And even though our economy has become increasingly integrated with the global economy, and external trade has come to occupy a greater share of the GDP, the overall growth is not based on an export led strategy.
 
14. India’s example shows that democracy and development can go together. Our policy choices for development have been the product of a healthy debate resulting in a broad political consensus. Even though at times the pace of development might seem slow, the overall trend and direction remain clear as demonstrated by the fact that economic reforms have continued apace since the 1990s, even with changes at the political level. Our key national priority is to have sustained rapid and inclusive economic growth while ensuring that the fruits of our economic development reach all sections of society. Indeed, as Larry Summers, former Chairman of the National Economic Council noted last October in a speech, India’s growth reflects the idea of a democratic developmental state, driven not by a mercantilist emphasis on exports, but a people-centered emphasis on growing levels of consumption and a widening middle class. 

15. A related aspect is the focus on innovation. To sustain rapid growth and help alleviate poverty, we intend to harness the creativity of our young population to drive innovation-led, rapid and inclusive growth to achieve economic and social transformation. Indeed our economic growth has not followed the traditionally accepted model of economic transformation from agrarian to manufacturing and then to the services economy. It has been propelled by the services sector utilizing the advances in technology and innovation. The last few years have highlighted many examples of how innovation is leading to lower costs and creating new markets. Tata Motors for instance has changed the paradigm of automobile production through its small car the “Nano” which costs about US $3000. Indian pharmaceutical companies are at the forefront of providing cheaper and affordable healthcare solutions particularly in the areas of vaccines not only in India but also world-wide. Another Indian company ITC created the “e-choupals” (choupals are traditional gathering places in Indian villages). Through these cyber kiosks farmers can now directly find prices of produce in the local markets and also get information about local weather conditions. This has led to elimination of middlemen, resulted in higher productivity and better prices for farmers. India already has some of the lowest tariffs for mobile phones. The diffusion of mobile telephony has enabled the penetration of services such as banking in remote areas. Today women’s self help groups in far flung villages are utilizing mobile banking to organize their activities and improve their economic well-being. Similarly tele-medicine is becoming a vehicle to allow people in far corners of the country to access the best in medical facilities.

16. I had mentioned a while ago about our development solutions having relevance for other countries as well. Indeed tele-medicine and tele-education are two areas where this is already happening. Today we are providing tele-medicine services to our neighbouring countries such as Bhutan. A similar effort is underway to connect countries of Africa through a pan African e-network. Indeed it was the development of innovative and low cost solutions in the field of agricultural development by India, that led to the agreement during President Obama’s visit  under which India and the US will work together to help improve agriculture productivity in some countries of Africa. India is now increasingly being seen as a solutions hub, a base for conducting sophisticated R&D and a technology innovator.

16. Going forward we are aware that there are many challenges that we need to overcome to realize the full potential of the promise that the future holds for us. A large section of our population still remains below the poverty line. Agriculture which employs more than 50% of our population generates only 16% of the GDP and agricultural incomes are not growing at the same rate as other sectors of the economy.  We need to therefore work towards improving agricultural productivity as well as improving our post harvest processing capabilities. And as I mentioned earlier we need to create the infrastructure, manufacturing capacities and services to benefit from our demographic asset.

17. There is also an external dimension to India’s growth story. Our economic future will depend to a large extent on global peace, stability and security.  We have therefore increasing stakes in ensuring a stable global order. This has also resulted in a greater and more purposeful engagement by India in global affairs. Our foreign policy always had a broad and open outlook.   Thanks to our economic growth and development over the last two decades, we now also have increased capabilities and capacities to contribute to global peace and security. We have today a broad agenda of cooperation with the major countries and regions of the world. In Asia, which is fast becoming the center of gravity of global opportunities and challenges of the 21st century, India is seen as an anchor of moderation and stability. We are also expanding our ties with our extended neighbourhood through greater economic, commercial and political engagement. Our growth has helped contribute to regional economic growth. Countries such as Sri Lanka and Bhutan have been able to leverage this for their own economic prosperity.

18. With the United States, we now have a strategic partnership.  Our shared values of democracy and pluralism and our increasingly convergent interests provide a firm foundation for our relationship.  We see our relationship with the US, which is one of our largest trade, investment and technology partners, as a vital element of our endeavour to transform our socio-economic conditions and the highly successful visit of President Obama to India last November has significantly expanded and deepened our cooperation particularly in areas such as health, education, agriculture, infrastructure and trade and commerce which are vital for our own development. These areas also represent tremendous opportunities for American businesses and companies, and would also help further strengthen the bonds between our peoples.   Our relationship with the United States is people-centric and nourished by the many personal connections which bring our people together in expanding circles. The nearly 3 million strong Indian American community has come of age and is a vital bridge between our nations.

19. Today, India is confident and aware of its capabilities. We are inspired by the success that we have achieved and driven by the aspirations of our young population. But at the same time we have not lost sight of the ideals that give us our strength. As we move forward, our efforts will continue to reflect and reinforce our ideals of pluralism, equality, individual freedom and the right of every individual to a life of dignity and well being.

Thank you.
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