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Interview of President by Mr. Hamish Fletcher, Associate Business Editor of New Zealand Herald

April 30, 2016

  • What are the most significant changes India has seen during your presidency?

    India has seen important changes on the political as well as economic front during my Presidency. After almost three decades, the people of India voted to power in May 2014 a single party with a majority for a stable government. They freed in the process the country’s governance from the compulsions of coalition politics.

    Our electorate, in the last general elections, was more than 800 million people, the biggest anywhere in the world. Over 66% of them cast their vote, an impressive percentage by any standard.

    At the time of our independence, there were many sceptics who thought our experiment with parliamentary democracy on the basis of adult suffrage would fail,especially since the vast number of our people were illiterate, poverty stricken and divided by language, religions and culture. India however has repeatedly proven them wrong and our democracy has only gone from strength to strength.

    As the President of India, my fundamental duty is to preserve, protect and defend our Constitution. I am happy to state that our Constitution has served our people well in the last 66 years. Various institutions created under our Constitution are robust and have ensured the rule of law as well as effective protection of the rights of our citizens. We are steadily advancing towards our goal of justice, social, economic and political for all our citizens.

    As a large country with a federal system where the Constitution provide for a division of powers, the center and the states are both working together for the common national good. States are competing with each other to pursue good policies and attract investment. Our mantra is "cooperative and competitive federalism.”

    India is today the fastest growing economy amongst the large economies of the world. This achievement is particularly remarkable as this has been achieved in the face of global headwinds and a second consecutive year of below normal rainfall.India recorded growth in GDP of 7.2 per cent in 2014-15, as compared to 6.6 per cent in 2013-14 and 5.6 per cent in 2012-13. It is expected to further grow at a rate of 7.6 per cent in 2015-16, indicating that India is firmly on the path of economic revival.

    The IMF, in its World Economic Outlook, published in April 2016, has estimated that India will grow by 7.5 per cent in 2016 as well as in 2017. The World Bank’s Report on Global Economic Prospects, published in January 2016, estimates that India will grow by a robust 7.8 per cent in 2016 and 7.9 per cent in the following two years. This growth compares with the growth of 3.1 per cent projected to be achieved by the global economy and 4.0 per cent by emerging market and developing economies as a block in the year 2015.

    Our industrial sector has witnessed impressive growth in the wake of various reforms undertaken by the government and stands at 5.4 per cent during 2014-15. The growth rate of the industrial sector is estimated to be 7.3 per cent during 2015-16 as per advanced estimates. Similarly, growth in the manufacturing sector is expected to be 9.5 per cent during 2015-16.Food inflation has been contained despite the below average monsoon during last two years.Our foreign exchange reserves stand at US$ 360.3 billion as on 15th April, 2016.

    Achieving and sustaining high growth is our determination. Growing consistently at around 8 per cent will help India double its GDP in 9 years. We believe that India has a medium term growth potential close to 8 to 10 per cent. Our optimism on growth in the short to medium term owes mainly to the fact that macroeconomic outcomes have improved significantly with reduction in vulnerabilities associated with economic slowdown, inflation, fiscal pressures and imbalances in external account.

    The reform initiatives of the Government along with its commitment to calibrated fiscal management and consolidation bode well for growth prospects and the overall macroeconomic situation. To reap the fullest benefit of our growth potential, we have to overcome infrastructure bottlenecks, improve the quality of labour force by educating as well as skilling them appropriately and ensure better health standards. The Government is working on this. The Government has launched a number of initiatives such as Make in India, improving the Ease of Doing Business, Invest India, Startup India etc. which is boosting our industrial growth.

    In addition, the government has launched a major program of financial inclusion--to bank the unbanked, and fund the unfunded. We have brought over two hundred million unbanked people into the banking system—and into the economic mainstream--within a span of a few months, setting a world record.

    We are using technology to improve governance and help the poor. We call this the JAM initiative—Jan Dhan (financial inclusion), Aadhaar (biometric identification), and Mobile. Thanks to this, we now have the world’s largest and most successful program of direct benefit transfer (DBP) in provision of cooking gas to the poor. As on 25thApril, 2016, the total number of households/beneficiaries under this scheme stood at 153.4 million with the total amount of subsidy transferred using DBT at Rs. 36,661 crore (US $ 550 million). This has improved targeting and the quality of public expenditure.

    We have undertaken a major program of opening up our economy to foreign direct investment (FDI) and the entire economy is now open to foreign business. Given the growth potential, a booming consumer market and skilled workforce, India is one of the most preferred FDI destinations in the world. We have now displaced China as the world’s largest destination for FDI.

    One of the big achievements of the last two years has also been to tackle the problem of corruption. To this end, the government has transparently and through an open process, auctioned major public assets such as coal and spectrum.

    India’s trade share is improving gradually. Our trade to GDP ratio was below 20 percent in the eighties. Today our trade to GDP ratio is about 44 percent.

    Our agricultural sector is a strong point for us. We are second in production in both wheat and rice in the world. We are one of the top exporters of these food commodities. All these point to the fact that India’s economic performance is increasingly becoming crucial for the global economy.

  • What do you see as the three biggest challenges that India faces as the world’s second most populous nation?

    Elimination of poverty remains the most important challenge for an aspiring India. We are not satisfied with mere "poverty alleviation". We have committed ourselves to the goal of "poverty elimination". We firmly believe that the first claim on development belongs to the poor and therefore we are focusing our attention on those who need the basic necessities of life most urgently.

    India has had significant accomplishments in reducing poverty. The percentage of population living below poverty line in the country declined from 37.2 per cent in 2004-05 to 21.9 per cent in 2011-12. About 85 million people were lifted out of poverty during the three year period 2009-10 to 2011-12. Between 2004-05 and 2011-12, the average annual decline of the poverty ratio was 2.2 percentage points per year which is around three times higher than the rate of decline in the poverty ratio during the period 1993-94 to 2003-04.

    The primary condition to tackle poverty in India is high growth. Thanks to the pro-growth policies of the Government and benign international commodity prices, India is firmly on the road to meet this first-order condition.

    Employment generation is critical to achieve lasting reduction in poverty. Hence, fostering labour absorption by sectors like organized manufacturing and value added services is important. Removing the structural bottlenecks hampering industry and enterprise and stirring the animal spirits will improve the potential for labour absorption. Equally important is to simultaneously erase the capability deficit of the poor to enable them reap opportunities created by growth. The required interventions for this purpose include: creation of vocational skills on mission mode, improving significantly the health, nutritional and sanitation status of the poor, de-bottlenecking labour market to facilitate labour mobility and absorption as well as focused programs on women empowerment and entitlement.

    Climate change is a serious challenge for India. Our agriculture, water resources, and disease environment will be affected by climate change. That is why, for us cooperation on climate change is so important. We played a leading role in the COP-21 negotiations at Paris. We have ambitious plans to build capacity in renewable resources such as solar. Between now and 2030, we intend to re-write history by not only growing rapidly but also reducing the emission intensity of our GDP by 33 to 35 percent compared to 2005. By then, 40% of our installed capacity of power will be from non-fossil fuel.

    We have further taken the lead in launching an international solar alliance, involving 121 solar-resource rich countries falling between the Tropic of Cancer and the Tropic of Capricorn. This will help many developing countries, including those in Asia, to take advantage of developments in renewable energy around the world. India also has moved from a regime of significant carbon subsidy to one of carbon taxes.

  • What is India’s single greatest asset in today’s world? What are the strategies to leverage that asset with a view to better the lives of the most economically deprived in India’s society?

    India’s greatest asset is undoubtedly the youth of our country. India is a vast country with a population of around 1.21 billion and a labour force of around 485 million. The Census projection report shows that the proportion of population in the working age group (15-59 years) is likely to increase from approximately 58 per cent in 2001 to more than 64 per cent by 2021.In 2020, the average Indian will be only 29 years old, compared to 37 in China and the US, 45 in West Europe and 48 in Japan. India is projected to have the largest workforce in the world by 2025, with a surplus of 47 million workers against a shortage of 56.5 million skilled workers in the world.

    India’s vibrant democracy and our open, decentralized political system are other major assets. It is our democracy which allows such a large and diverse country to be managed and kept together.

    The Government has adopted a comprehensive growth-promoting reform agenda to deal with the variety of challenges confronted by India. These initiatives include: fiscal reforms with emphasis on consolidation; quality of expenditure and rationalization of tax structure; a clear roadmap for introduction of a country-wide Goods and Services Tax; the ‘Make-in-India’ and other digitization initiatives combined with substantive measures to facilitate business and industry; liberalization of foreign direct investment; measures to de-bottleneck the supply of key raw-materials; transparent pricing policies in petroleum products and various measures to improve clarity and transparency in economic policy-making. In order to bridge the human capability deficit, the Government has assessed sector-wise human resource and skill requirements and launched an ambitious Skilling India initiative.

    While improving economic growth and upgrading capabilities are the twin components of the long-term strategy for poverty eradication, the sufferings from poverty are also sought to be mitigated through a wide variety of programmes for livelihood support and social security. The Government has laid stress on eliminating leakages in transfer payments, payment of wage employment and subsidies though direct benefit transfer. The massive financial inclusion programme that has achieved tremendous success so far has assisted such transfers.

    We are confident that the youth of India can become creators, innovators, builders and leaders of the future. But, they can transform the future only with proper education. The higher education sector has seen massive expansion over the last ten years. India now has a total of 712 universities and 36671 colleges. Greater number of institutes has translated into larger number of seats. This has also led to better access and equity in higher education. Many of our youth from remote parts of the country are availing of higher education due to this massive exercise at democratization of education.

    We have to also capitalize on our advantage and enhance the employability of our youth through skilling, re-skilling and up-skilling. Skill development is important for the success of the Make-in-India campaign aimed at facilitating investment, fostering innovation and making India a world-class manufacturing hub. The National Skill Development Mission envisages skilling of 300 million youth by 2022. A separate Ministry for Skill Development has been created. Several other schemes have also either been started or strengthened in order to develop a large pool of trained manpower in the country.

    I am optimistic about India’s future on account of four factors. One, our demography. We are already the repository of the largest population of young in the world with over 50 percent of our 1.25 billion people below the age of 25 years. Within a decade, we are going to have the largest population in the working age bracket of 15-59 years, which will be roughly two-third of our population. The above will occur when advanced economies round the globe are likely to face a human resource crunch due to an ageing population.

    Two, with a large higher education sector (the second largest in the world in terms of enrolment), India has the potential to prepare a capable and skilled workforce that will take care of manpower requirements not only of the domestic economy but also of many manpower deficient economies.

    Three, we are a democratic country having well-entrenched institutions of democracy, with democratic ideals firmly rooted in us. Our policies are geared to usher in development and improvement in the lives of all Indians. We have strived for an inclusive model of development since independence. This has resulted in a large middle class of around 300 million people. This is a huge consumer market which no global business can afford to ignore. I am confident India will remain a favoured destination for investors for many years to come. This will not only lead to productive investments and growth but also creation of more jobs and employment opportunity, leading to overall improvement in the lives of the people.

    Finally, India is a leader in many advanced technologies, especially information and communication technology. The power of technology will revolutionize the world in no small measure. Indian IT companies have already made a mark in the world. Our IT backbone will help usher in innovative technology solutions that will make life easier for the common man, enhance the ease of doing business and facilitate good governance. Today, the number of mobile phone users in India has crossed 1 billion and internet users over 462 million. I am certain the information revolution aided by technology will change the landscape of our country.

    In short, I am confident India is on the verge of a take off and we look forward to engaging in close cooperation with the companies and business of New Zealand for mutual benefit.

  • How important is the Pacific region (New Zealand, Australia, Pacific Islands) in India’s strategic future plan?

    The Pacific region is a natural extension of our immediate neighbourhood of South East Asia. With our 'Look East' policy evolving into an 'Act East' policy, the region has gained even greater salience in our strategic thinking and economic engagement. Most of India’s foreign trade flows through the sea lanes of the Indian and the Pacific Oceans. These lanes also bring us the bulk of our energy– be it oil, gas or coal.

    India shares many commonalities with these countries. Democracy is entrenched in the region. The English language is a common factor. This region is home to vibrant economies with youthful populations. The large Indian diaspora cements our relationship.

    I believe, this region holds tremendous potential for enhancedtrade and investment as well as people to people contacts.

  • What common ground do you see between India and New Zealand? What are the areas of cooperation that need to be explored?

    India and New Zealand historically share close and cordial ties.

    Commonalities such as membership of the Commonwealth, common law practices and shared aspirations of achieving economic development and prosperity through democratic governance systems in both countries provide an excellent foundation for deepening existing ties. Both countries also share a great deal of convergence of views on important regional and international issues. I believe there is considerable scope for further expansion of cooperation in the fields of trade and investment, science and technology, education, agriculture, information and communication technology etc.

    And, of course, we should never forget that cricket—followed so avidly in our two countries--is a strong binding force at a people-to-people level.

  • India, as a huge economy, has a lot to offer New Zealand as an export market. What benefit would India get from increased ties or trade with New Zealand?
    India’s large and expanding middle class, critical infrastructure and natural resource requirements, expanding economic and commercial presence in South-East Asia and close ties with Asia Pacific countries provide tremendous scope for intensifying bilateral economic and commercial ties.

    New Zealand has strong expertise in areas such as agriculture, food processing, high-end manufacturing, disaster management etc., which is of interest to India. Its tourism and education sectors also have significant strengths which could benefit India.

  • How could India and New Zealand possibly increase people-to-people contact and interaction to develop deeper, mutually fruitful relationships? What challenges or obstacles need to be overcome to achieve this?

    People-to-people contacts between our two countries have flourished since migration from India to New Zealand began at the turn of the last century. A sizeable population of Indian and Indian origin people, numbering approximately 1,74,000, has made New Zealand their permanent home. The number of Indian students as well as tourists going to New Zealand has seen a sharp rise in recent years. This portends well for people to people contacts between our two countries. With a number of Indian movies, including regional language movies, being shot in New Zealand, Indians are getting acquainted with the stunning natural beauty of New Zealand. Connectivity remains an issue but this will be addressed to an extent with the planned signing of a bilateral Air Services Agreement between our two countries during my visit. I foresee that we are on the threshold of a far closer people to people relationship between our two peoples than we have ever seen.
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