My dear friends ,

I feel honoured to address this gathering, in this institution of great eminence, While, I propose to share my thoughts about the Indian Economy, I keenly look forward to an interaction with all of you over the next hour or so.

1. In 2014, when National Democratic Alliance (NDA) was voted to power by the world’s largest democracy, India was a USD 1.7 trillion-dollar economy. In 2019, India has become a USD 2.7 trillion-dollar economy having added USD 1 trillion in the last five years. Our vision to become a USD 5 trillion-dollar economy by 2024-25 is challenging but also realizable. Realization of our goal is not fraught in uncertainty, but is connected to our single-minded dedication to reforms the evidence of which is there for the world to see.

2. To become a USD 5 trillion-dollar economy,

India’s GDP needs to grow faster than what we grew at an average of 7.5 percent in the last five years.

Inflation needs to be at 4 percent to ensure commensurate increase in purchasing power. Our inflation in the last five years was 4.5 percent and has been on a declining path to reach 3.4 percent in 2018-19.

Fixed investment rate needs to increase from 29 percent to 36 percent in the course of next five years.

With some depreciation of the rupee, we are well and truly on our way to becoming a USD 5 trillion-dollar economy by 2024-25.

3. A USD 5 trillion-dollar economy will make India a global economic power-house, moving us from the 7^th to the 3^rd position in terms of current USD exchange rate. However, our ambition to become economically strong has been driven more by our desire to become a less-poorer nation. The poverty head count ratio declines with higher growth as has been the case with India as well. Poverty head-count ratio in 2011 measured 21.2 percent of India’s population earning less than USD 1.90 per day. World Bank has estimated the level in FY 19-20 at 7% and will further decline to 4.6% of the population in FY2022. This means that in a decade, we have lifted 168 million people of poverty-a fitting tribute to Mahatma Gandhi, who dreamt of ridding the country of this scourge.

4. In an emerging economy poised for higher growth, some increase in income-inequality is inevitable. India is no exception to this trend. In July, 2019 I presented my first budget of Government of India. At that time India’s GDP had decelerated in four consecutive quarters. Yet we projected the GDP to grow at 7 percent in 2019-20, slightly higher than 6.8 percent realized in 2018-19. Even when our GDP decelerated in the fifth successive quarter, we did not revise downwards our projections as some institutions around the world have already done. Several times I have been queried on the revised growth estimate ofthe economy. I want to take this opportunity to set the government’s record straight on the growth math.

5. Friends, we have just entered the second half of 2019-20 and already implemented a series of reforms with more on the anvil before close of year. The reforms were and will be guided by close scrutiny of growth evidence in the economy. Our vision of becoming a USD 5 trillion-dollar economy in 2024-25 remains unchanged and further strengthened by our resolve to deliver on the resounding mandate given to us by the largest electorate in the world.

6. The IMF has projected a growth at 6.1% for the year 2019-20 with the world Growth revised at 3.2%. We continue to remain one of the fastest growing economies in the world. Friends, our growth story is not a hostage to performance in some quarters. As a member of G-20 group of countries, we have already entered the big league, on the strength of our economic performance and vibrant democracy.

7. I believe that a strong growth story such as ours can only be sustained on foundations of a strong macro-economic stability. Therefore, despite all odds, we have continued our journey of sticking to a glide path for fiscal deficit enumerated in my Budget speech. The year would end with Central Govt. debt at 48 % of GDP, down two percentage from the level of 2013-14.This is evident in low yields in the bond market and would leave enough space for private investment.

8. Gross FDI flows into the country during April-July was 27.3 Billion USD up from 21.1 Billion USD witness during corresponding period last year. Total FDI of 284 Billion USD bears witness to the confidence of the World to strong macro- economic fundamentals of our economy.

9. The growth impulses in the Economy have been buffeted by the winds of trade wars, protectionism and volatility in Crude Prices as well as in Crude Supplies that the world is witnessing. However that hasn’t deterred us from continuing the path of structural reforms in the economy. The banking system, saw an irrational exuberance of credit expansion during 2004 – 2009. This led to huge distortions on the banking system. As soon as the NDA government came to power, we set about the task of repairing the financial system of the country. Insolvency and Bankruptcy Code (IBC) was introduced to quickly resolve the stressed assets of the banks. Between December, 2016 and June, 2019, 2162 corporate insolvency resolution processes have been admitted and are at various stages of resolution. NPAs in the bank were recognized, provisioning made and full program of re-capitalization was carried out. During this year as well, a part of the budget was committed to the recapitalization of the public sector banks, which has recently been subjected to mergers and reforms in senior appointments for improving governance. In July, 2019 government decided to infuse about USD 10 billion into public sector banks to enable release of about USD 75 billion liquidity in the market. Additional liquidity support to NBFCs to the tune of USD 3 billion has also been planned. Investment by foreign portfolio investors has been encouraged through the required changes in the tax regime.

10. In addition to the financial sector reforms, we have started the process of reducing the cost of capital for increasing the investment rate of the private sector. The Reserve Bank of India has cut the policy rate by 135 basis points since February, 2019 and further guided the banks to link their lending rates to external benchmarks, including the policy rate, to improve transmission.

11. We have recently cut our basic corporate tax rate from 30 percent to 22 percent and further to 15 percent for companies incorporated after 1^st October, 2019. This is intended to improve profitability of companies inducing them to increase their investment. We are expecting that improved compliance, in the form of companies choosing to give up on tax exemptions, will neutralize some revenue loss while the rest of the shortfall will be met by disinvestment proceeds.

12. To further boost investment we have liberalized the FDI regulations to enable greater participation of foreign investors in the coal market, allowing contract manufacturing to reflect as self-manufacturing activity by foreign investor in the country, and increasing ease of doing business for foreign retailers. An export package has been announced for easing doing of business by exporters, cutting their costs and imparting them greater visibility in the global market. To boost rural incomes and thus consumption in the economy, income support to farmers has been extended. Voluntary pension scheme for retail traders and shopkeepers has been introduced as social support, which will induce consumption through enhanced wealth effect.

13. India has a population of over 1.3 billion that lends a huge expanse to the coverage of beneficiaries under various development programmes of the government. The sheer scale of the programmes is unparalleled in the world making such interventions a gigantic challenge for the government. Direct Benefit Transfer (DBT) underpin our flagship programmes. This has brought transparency improved outcomes and contained diversion of funds. Use of Aadhar has helped use of technology in DBT.

Rural Infrastructure

Under 'Saubhagya Yojna', the government has achieved 100% electrification of all villages in the country. Under the Pradhan Mantri Gram SadakYojana (PMGSY), construction of rural roads has been tripled. More than 143,000 habitations out of a total of 158,000 sanctioned habitations have already been connected with pucca roads.

Swachh Bharat Mission is the largest cleanliness drive as well as an attempt to effect behavioural change in the world ever. Even 67 years after India’s independence, in 2014, around 100 million rural and about 10 million urban households in India were without a sanitary toilet; over 564 million, i.e. close to half the population, still practiced open defecation. Since October 2014, over 100million toilets have been built all over the country and 599,963 villages have been declared Open Defecation Free (ODF).

Housing for All

Under the Pradhan Mantri Awas Yojana, the Government aims to provide affordable housing to the poor with a target of building 20 million affordable houses by 31 March 2022. During the period 2014-18, a total number of 15.3 million houses have been built.Under PMAY-Urban, the cumulative number of houses sanctioned is 8.5 million. Construction of another 140,134 houses is under way.

Financial Inclusion

The government has launched many flagship schemes to promote financial inclusion and provide financial security to empower the poor and unbanked in the country. As on 2^nd October, 2019, there are 371.9 million active accounts in public and private sector banks combined. Of this, more than 53 per cent accounts are being held by the women beneficiaries. Their accounts hold USD 10 Billion today.

Doubling Farmers’ Income

PM-KISAN is a Central Sector scheme under which direct income support will be provided to all farmers (irrespective of the size of land holdings) at the rate of Rs. 6,000 per year. This scheme will extend coverage to 145 million beneficiaries. As on 13.10.2019, a total of 74.5 million small and marginal farmers have benefitted from this scheme. Initiatives only Micro Irrigation have not only helped in conservation of water, they have improved productivity and have permitted farmers to experiment with more remunerative crops. While improving Minimum Support Price is an important step in a Demand Side Intervention, Government is also contemplating more market driven initiatives to give price signals to farmers to plan his crops sufficiently in advance.

Disinvestment

The Government has been following an active policy on investment / disinvestment in CPSEs through various modes and has made provisions to enable the CPSEs to improve their balance sheet/ reduce their debts and to meet part of their CAPEX requirements. A sum of Rs 850 billion was raised through CPSE disinvestment in 2018-19. An enhanced target of Rs. 1050 billion disinvestment receipts have been set for the financial year 2019-20. Disinvestment in 25 PSEs is underway to facilitate creation of fiscal space and improve the efficient allocation of public resources.

Employment and Labour Reforms

In order to remove the complexity intrinsic in many labour laws at the central and state levels, a new labour legislation has recently been passed by the Parliament.

Universal Health Coverage

There have been noteworthy strides over the past two decades in the quality of health care delivered to citizens and population health outcomes. Through the Ayushman Bharat programme announced in Union Budget 2018, probably the world’s largest government funded health care programme, the Government of India has embarked on a pathbreaking journey to ensure the affordability and accessibility of healthcare in India. The scheme aims to cover 107.4 million families at the bottom two quintiles with Rs 500,000 cover each year for secondary and tertiary care hospitalization. As on 23.07.2019, 16,039 hospitals (8059 Private Hospitals & 7980 Public Hospitals) have been empanelled under the scheme. More than 5 million beneficiaries have been treated in more than 18 thousand empanelled hospitals.

Nutrition

India can leverage its demographic dividend only if its citizens attain optimum levels of health, nutrition and cognition. Recognising this, the government launched the POSHAN Abhiyaan in March, 2018 to provide policy and programmatic guidance to high burden states and districts, facilitate multisectoral planning, catalyse resource mobilisation and develop a surveillance system for nutrition.

14. Friends, before I conclude, let me reiterate our confidence in achieving a USD 5 trillion-dollar economy in the next five years with considerable reduction in poverty and manageable levels of income inequalities. A critical component of our vision is high levels of investment driven by the private sector, a larger presence in the global markets, and a lower level of public debt. The growth path that our leader and Prime Minster Sh. Narendra Modiji has set and we believe it is the one we will deliver to the people of India.

Thank you.

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