Speech of the Prime Minister at the Inaugural Session of the 46th AGM of the Asian Development Bank

pmiFollowing is the text of the Prime Minister, Dr Manmohan Singh’s speech at the Inaugural Session of the 46th AGM of the Asian Development Bank in Greater Noida today:

“On behalf of the Government and people of India, I warmly welcome you all to the 46th Annual Meeting of the Board of Governors of the Asian Development Bank. I also congratulate President Nakao on his election as the President of ADB. Let me also place on record not only India’s but the entire region’s sincere appreciation of the role that the ADB’s former President Haruhiko Kuroda played in guiding the ADB over the past eight years.

After centuries of stagnation and deprivation, Asia is once again regaining its primacy in the global economy. For almost half a century, the ADB has been a trusted partner of the Asia Pacific region in general and the developing member countries in particular in this very exciting journey. You have an even more important role to play in the times to come and I wish you all the very best.

The 21st century is rightly spoken of as the Asian century. In a proper perspective, this should be seen as a process of resurgence, of Asia regaining the position it had on the global stage some 250 years ago. The rapid modernization and expansion of Asian economies is acknowledged as one of the most dramatic developments in the economic history of the world. This process has also pulled out of poverty the largest number of people ever in the history of human kind. If the current momentum continues, Asia`s share in the world economy would double by 2050 and would account for over half of the global GDP.

In 2013 the IMF expects advanced developed economies to grow at only 1.2% while developing Asia is expected to grow more than five times faster at 7.1%. The Asian region is expected to play a crucial role in driving and stabilizing the global recovery process.

The resurgence of Asia is a part of a process where economic power has been shifting to emerging economies in recent years. At Purchasing Power Parity, emerging economies accounted for 80% of the world growth in 2012, with emerging Asia accounting for a majority of it and China and India accounting for 35% and 10% of world growth respectively. This trend is only likely to continue in the years to come.

As the world moves towards one where consumption and investment shift towards emerging markets, especially in Asia, several opportunities and challenges arise. They include accommodating different models of growth, ensuring that growth is inclusive and providing Asian countries with a voice in international fora that is commensurate with the aspirations and needs of their people. The ADB is uniquely positioned to facilitate this change and work with governments to make the world order more inclusive, fair and stable.

While it is true that Asia and the Pacific region, growing at over 8% annually over two decades, is the most dynamic region of the world, there are still stark differences across and within countries in this vast region. Though there has been a significant reduction in poverty in many countries, inequalities have not fallen, and some social indicators, including the extent of malnutrition, have not improved significantly. Deficiencies also exist in the delivery of public services, health, education, infrastructure development and the protection of environment. It is time Asian economies step-up their efforts to address common challenges by investing resources in areas that help to empower all sections of our people. The ADB can play an important role in this regard.

With 1.7 billion people still continuing to live on less than $2 per day poverty alleviation must indeed remain as the most immediate goal of public policies in Asia. At the same time there should be a longer-term view and a vision of an Asia beyond poverty, a vision of shared prosperity. I hope the ADB will commit itself with renewed vigour to address the challenges posed by these two different needs of Asia.

High economic growth is essential. But it cannot be an end in itself. The benefits of rapid growth must necessarily lead to a betterment in the lives of the common people. Equitable distribution of the fruits of development requires the pursuit of development through empowerment of people. This is the key to inclusive growth. Creation of new productive job opportunities for the growing labour force is the most powerful means of empowering the people. For this purpose, skill development is the most potent instrument.

One hears a lot about the demographic dividend that developing Asia could enjoy in the coming decades. We need effective institutions and effective policies to make this happen. Adequate investments in sectors such as health, primary and higher education, skill development, as well as industrial sectors that can provide gainful employment, are very crucial. With the limitations of agriculture in absorbing additional labour, high productivity jobs need to be created in sectors outside agriculture. This would broaden the base of economic growth and add vibrancy to the labour market.

Adequate investments in the much needed infrastructure sectors require timely access to capital. As investments in infrastructure are inherently long-term, and the private sector continues to be risk averse in many cases, a concerted global effort towards infrastructure financing and investment has to be high on the global agenda. This is where Multilateral and Regional Development Banks come in. As I said at Los Cabos meeting of the committee of twenty, infrastructure investment in developing countries not only lays the foundation for rapid growth in these countries, but it also provides a good stimulus to the advanced economies, and promotes global recovery and job creation through a rebalancing of the global economy. We have expanded the resources of the IMF enormously in response to the crisis in Europe. We now need to substantially expand the resource base of Multilateral Development Banks so that they have the firepower to help developing countries reach their development potential.

I understand that the level of lending that the ADB can sustain is projected to come down. At this juncture, ADB should take the initiative to find innovative ways to channelize global savings into infrastructure projects in Asia Pacific. ADB’s good rating and technical expertise can be leveraged to raise resources in domestic and international markets through appropriate instruments. Pooling investments across various countries can mitigate risk which can be further reduced through credit enhancement by the ADB. Moreover, expanding infrastructure financing and investment through the intermediation of the ADB could help lower the cost of financing long-term infrastructure projects. I hope the ADB can consider moving in this direction and propel growth in this vast region.

Regional cooperation and integration among countries in Asia and the Pacific can play a critical role in accelerating the process of economic growth, reducing poverty and economic disparities. The importance of building cross-border infrastructure, of eliminating trade and investment barriers, and of cooperation including transfer of technology, in regional public goods such as clean air and energy, energy efficiency, management of water resources, control of communicable diseases, and management of natural disasters cannot be over-emphasized. We believe that promoting regional cooperation is the key mandate of the agreement that created the ADB and a testament to the sagacity of the founding fathers of this great institution.

India is a firm believer in the benefits of regional integration and is committed to promoting it. We stand committed to deep engagement with the countries of East and Southeast Asia.

India has set itself a target of over 8% annual growth in our Twelfth Five Year Plan, which runs from 2012 to 2017. This is the rate of growth that the country achieved over the past decade. We are initiating measures to spur investment and to make India more attractive to investors both at home and abroad. We have taken steps to fast track major infrastructure projects. In recent months, we have also introduced strong measures to achieve fiscal consolidation.

Both India and the ADB have a strong commitment to a common agenda in making the growth processes more inclusive and sustainable. I sincerely believe that this is not just a social and political imperative, but also a sound economic underpinning for sustained long term growth. Therefore, we place special emphasis on livelihood security, food security, healthcare, education, skill development and on clean and renewable energy.

Decentralized governance through the institutions of Panchayati Raj in India has empowered ordinary citizens and has gone a long way in making them active participants in processes of development. Today, more than 3 million elected representatives in local governments, almost 40% of them women, are shaping the development agenda in their communities across India. Similarly, the women’s self-help group movement today has in its fold more than 30 million women across the country, engaged in various livelihoods, and taking on newer and more important roles in their communities.

In recent years we have introduced legal entitlements to work, education and information from public authorities. We also plan to provide our people a legal entitlement to food at affordable cost. A legislation in this regard is before our Parliament. We are also creating the world’s largest electronic identity database under the programme “Aadhaar” to serve as a basis for citizen identification and efficient delivery of public services and entitlements. The Direct Benefits Transfer programme will make it simpler for the beneficiaries to have access to benefits and will also eliminate corruption and wastage in the delivery of public services.

Asia today stands on the verge of a momentous transformation. If the potential of our economies is harnessed fully through appropriate policies and a strategic vision, Asia will certainly play a far greater role in world affairs and in promoting global well-being. Each one of the Asian countries must find ways and means of contributing to the fulfillment of this noble vision. I strongly feel that the time has come for greater cohesion among our economies for building a more empowered, stable and secure world and for the major development bank in the region to play a pivotal role in this regard. I wish you all success in your 46th Annual General Meeting.”