Prime Minister Modi, Chief Minister Patel, Finance Minister Jaitley, Secretary General Ban Ki-Moon, distinguished guests, ladies and gentlemen: Thank you for welcoming me to Vibrant Gujarat.
This is my third visit to India as President of the World Bank Group and my first time in Gujarat. When I received this invitation, I realized I couldn’t pass up the opportunity to visit the home state of Prime Minister Modi. In Korean culture, we take it very seriously when a friend invites you to where he’s from. So I’m truly honored to be here with you, Mr. Prime Minister, and with the distinguished group you’ve gathered.
At the World Bank Group, we work with countries to promote economic development and maximize economic growth. But we do so in the context of our twin goals to end extreme poverty by 2030 and to boost shared prosperity. To end extreme poverty in the world in the next 15 years, we must reduce the number of people living on less than $1.25 a day to below 3 percent of the population. In boosting shared prosperity, we must ensure that the poorest 40 percent of a country’s people share equally in the gains of economic growth. So, like all of you, we have an interest in promoting policies and supporting projects that maximize sustainable and inclusive economic growth – indeed that is our vision for 21st century global development.
And we will not be able to turn this vision into reality unless India, home to more than 1.25 billion people, follows a path of rapid growth in which all Indians benefit. Hundreds of millions of Indians live on less than a $1.25 per day, and the poorest 40 percent of the population here constitutes 500 million people – on their own, they would be the third largest country in the world. Our success is therefore closely tied to the country’s economic growth and development. For this reason, we’re committed to catalyzing a vibrant India, which, with strong trade ties to its neighbors, is able to realize its full potential.
For investors, entrepreneurs and CEOs thinking of doing business in Gujarat and the country as a whole, there’s much reason for optimism. We project that India will be a bright spot in an otherwise mediocre global economic outlook. According to our projections, its economy is expected to grow 6.4 percent this year and even faster in 2016. In addition, Prime Minister Modi and his government are quickly putting in place the building blocks for even more rapid growth, streamlining the national regulatory structure, using public funds more efficiently, and promoting social inclusion.
For example, I’ve been very encouraged by the recent proposal of a Constitution Amendment bill for a Goods & Services Tax (GST), which offers an opportunity to make it substantially easier to do business in India. A GST will create one common market and substantial savings for companies on logistics, especially if its structure is uniform.
The Modi government has also eliminated diesel subsidies that, for years, have been a drag on India’s growth and harmed the environment. If made permanent, this decision will improve the country’s fiscal position, reducing the cost of borrowing and public investments. Investing some of these newly liberated funds in human capital through, for example, increasing access to health care and education, will improve labor productivity. As with GST reform, this will bolster the country’s attractiveness to investors and business, raise workers’ incomes and create jobs.
In addition to action that will accelerate growth, Prime Minister Modi has focused on programs to promote the broad sharing of its benefits. Indian society has an enduring exclusion that is based, among other things, on caste identities. This bias can impede shared prosperity, serving as a basis for discrimination in many spheres, including in employment and other markets, as well as in public services. The government is well aware of this. Its special allocation to a fund for entrepreneurs from among the Scheduled Castes, and its focus on fixing bottlenecks so that money earmarked for the Scheduled Tribes reaches them, are both ethically just and economically sound responses.
These tax and subsidy reforms and public investments in human capital are essential to generating inclusive and sustainable growth in India over the next century. However, we must know that more can be done. Last July, when Prime Minister Modi and I met in Delhi, he asked us to serve as the government’s “information partner” for its aggressive campaign to improve the economic welfare of all Indians. Together, we will build on decades of effective collaboration, which include the Green & White Revolutions; the roads, bridges and rail networks that link this vast land; and campaigns to tackle polio, tuberculosis, HIV/AIDS and leprosy.
We will offer technical expertise and share knowledge on a variety of issues central to the country’s accelerated economic development. I’m particularly excited about our work together on renewable power generation because it can make India the world leader in solar energy.
The government has set an ambitious target of using solar power to produce 100,000 megawatts of electricity by 2022, or over 12 percent of the country’s projected demand. We’re helping to design the solar parks and farms, grid upgrades and non-grid solutions to meet this target, making power both more available and accessible. We also have plans to provide billions of dollars in financing to make these designs a reality. Combined with the technical expertise we’re providing states for the 24/7 Power for All initiative, this effort will create growth that is sustainable and inclusive through a strong solar energy sector and more energy for everyone. Because it can reduce the growth rate of the country’s burgeoning greenhouse gas emissions, a vibrant solar sector can also be a key element of India’s contributions to the Paris climate change conference.
I feel fortunate to be here at what feels like a critical moment in the history of India. The country has enjoyed years of strong economic growth and appears to have weathered the worst of the global financial crisis. It has a visionary leader who is focused on economic strategies that we believe will put the country on a path to faster, more inclusive growth. India is therefore on the cusp of major progress in reducing the number of people who live in extreme poverty. If these initiatives are fully implemented, Prime Minister Modi and his government will promote inclusive and sustainable growth, allowing businesses and entrepreneurs to profit, create jobs, and help the most vulnerable.
Martin Luther King, a long time hero of mine, was himself inspired by a favorite son of Ahmedabad, Mahatma Gandhi. Dr. King fought for civil rights in the United States and justice for the poor around the world. He showed us that, in order to bring about historic change, we must ourselves forcefully bend the arc of history toward justice. Over the last several decades, rapid economic growth helped China lift hundreds of millions of people out of poverty; in the next decades, we think India can be the leader that guides us to the end of poverty. We are the first generation in human history that can eliminate extreme poverty from the face of the earth. With the leadership of Prime Minister Modi, Secretary General Ban Ki-Moon, all of the business and political leaders here today and, most importantly, the hard working people of this great country, we can unleash a movement that will remake history. Indeed, of all the things to “Make in India,” the most important for all of us is to make, right here, the very foundation for a world free of poverty.
Video of the President's Speech at the Vibrant Gujarat Summit can be seen here.