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In less than 3 years, Government has transformed the economy: PM Narendra Modi

Published By : Admin | December 24, 2016 | 13:01 IST
India is being seen as a bright spot. Growth is projected to remain among the highest in the world: PM
In less than 3 years, our government has transformed the economy: PM Modi
Financial markets can play an important role in the modern economy, says the Prime Minister
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My aim is to make India a developed country in one generation: PM Narendra Modi

It is a pleasure for me to be here today to inaugurate this new campus. This is a time of slowdown in the global economy. Developed countries and emerging markets are both facing slow growth. Against this background, India is being seen as a bright spot. Growth is projected to remain among the highest in the world.

India’s place as the fastest growing large economy has not come about by accident. To see how far we have travelled, we should look back to 2012-13. The fiscal deficit had reached alarming levels. The currency was falling sharply. Inflation was high. The current account deficit was rising. Confidence was low and foreign investors were turning away from India. India was considered the weakest of the BRICS nations.

In less than 3 years, this government has transformed the economy. We have cut the fiscal deficit target every year and also achieved it every year. The current account deficit is low. Even after the redemption of loans taken under the special currency swap in 2013, foreign exchange reserves are high. Inflation is low, running at less than 4 per cent compared to double digit inflation under the previous government. Public investment has increased largely, even while the overall fiscal deficit has been cut. A new monetary policy framework has been introduced by law with an inflation target. The Constitutional Amendment on Goods and Services Tax had remained pending for years. It has been passed and the long awaited GST will soon be a reality. We have made progress on improving the ease of doing business. As a result of all these policies, Foreign Direct Investment has reached record levels. By claiming that demonetisation has stopped a fast moving car, our critics too have acknowledged the speed of our progress.

Let me make one thing very clear: This Government will continue to follow sound and prudent economic policies, to ensure that India has a bright future in the long run. We will not take decisions for short term political point scoring. We will not shy away from taking difficult decisions, if those decisions are in the interest of the country. Demonetisation is an example. It has short term pain but will bring long term gain.

Financial markets can play an important role in the modern economy. They help in mobilizing savings. They channel the savings towards productive investments.

However, history has shown that financial markets can also do damage, if not properly regulated. It is to ensure good regulation that the Securities and Exchange Board of India, - SEBI - was established by the Government. SEBI also has a role to promote the development of healthy securities markets.

Recently, the Forward Markets Commission has been abolished. SEBI has been given the task of regulating commodity derivatives also. This is a big challenge. In the commodity markets, the spot market is not regulated by SEBI. Agricultural markets are regulated by states. And many commodities are purchased directly by the poor and the needy, not by investors. Hence the economic and social impact of commodity derivatives is more sensitive.

For financial markets to function successfully, participants need to be well informed. I am happy to note that the National Institute of Securities Markets is performing the role of educating various participants and providing skill certification. Today, our mission has to be a `Skilled India’. Indian youth should be able to compete with their counterparts in any corner of the world. This institute has a vital role to play in such capacity building. I have been told that around one lakh fifty thousand candidates undertake examinations of NISM every year. More than 5 lakh candidates have been certified by NISM till date.

India has earned a good name for its well-regulated securities markets. The spread of electronic means of trading and the use of depositories have made our markets more transparent. SEBI as an institution can also take pride in this.

However, there is still a long way to go for our securities and commodity markets. When I see the financial newspapers, I often read about the success of IPOs and how some smart entrepreneur has suddenly become a billionaire. As you know, my government is very keen to encourage start-ups. Stock markets are essential for the start-up ecosystem. However, it is not enough if the securities markets are considered as successful by international investors or financial experts. Wealth creation is good, but for me that is not the main purpose. The real value of our securities markets lies in their contribution

• to the development of the nation,

• to the improvement of all sectors and

• to the welfare of the vast majority of citizens.

So, before I can consider financial markets to be fully successful, they have to meet three challenges.

Firstly, the primary aim of our stock market should be to help in raising capital for productive purposes. Derivatives have a use in managing risk. But many people feel derivatives are dominating the markets and the tail is wagging the dog. We should ponder as to how well the capital market is performing its main function of providing capital.

Our markets should show that they are able to successfully raise capital for projects benefiting the vast majority of our population. In particular, I am referring to infrastructure. Today, most of our infrastructure projects are financed by the Government or through banks. The use of capital markets for financing infrastructure is rare. For infrastructure projects to be viable, it is very important that the borrowing should be of long duration. It is said that we do not have a liquid long term bond market. Various reasons are given for this. But surely this is a problem which the financial brains in this room can solve, if you really put your minds to it. My call to you is to find ways to enable the capital markets to provide long term capital for infrastructure. Today, only the Government or external lenders like World Bank or JICA provide long term money for infrastructure. We must move away from that. Bond markets must become a source of long term infrastructure finance.

You are all aware of the huge capital requirements for improving urban infrastructure. This government has launched an ambitious Smart Cities programme. In this context, I am disappointed that even now, we do not have a municipal bond market. There will be problems and difficulties in creating such a market. But the true test of an expert innovation is when it solves a complex problem. Can SEBI and the Department of Economic Affairs ensure that at least 10 cities in India issue municipal bonds within one year?

Secondly, the markets must provide benefits to the largest section of our society — namely our farmers. The true measure of success is the impact in villages, not the impact in Dalal Street or Lutyens’ Delhi. By that yardstick, we have a long way to go. Our stock markets need to raise capital in innovative ways for projects in agriculture. Our commodity markets must become useful to our farmers, not just avenues for speculation. People say that derivatives can be used by farmers for reducing their risks. But in practice, hardly any farmer in India uses derivatives. That is the fact. Unless and until we make the commodity markets directly useful to farmers, they are just a costly ornament in our economy, not a useful tool. This Government has introduced e-NAM – the electronic National Agricultural Market. SEBI should work for closer linkage between spot markets like e-NAM and derivatives markets to benefit farmers.

Thirdly, those who profit from financial markets must make a fair contribution to nation-building through taxes. For various reasons, the contribution of tax from those who make money on the markets has been low. To some extent, it may be due to illegal activities and fraud. To stop this, SEBI has to be extremely vigilant. To some extent, the low contribution of taxes may also be due to the structure of our tax laws. Low or zero tax rate is given to certain types of financial income. I call upon you to think about the contribution of market participants to the exchequer. We should consider methods for increasing it in a fair, efficient and transparent way. Earlier, there was a feeling that some investors were getting an unfair deal by using certain tax treaties. As you know, those treaties have been amended by this government. Now it is time to re-think and come up with a good design which is simple and transparent, but also fair and progressive.

Friends.

I know that financial markets attach a lot of importance to the budget. The budget cycle has an effect on the real economy. In our existing budget calendar, the authorization of expenditure comes with the onset of the monsoon. Government programmes are not active in the productive pre-monsoon months. Hence, this year, we are advancing the date of the budget so that expenditure is authorized by the time the new financial year begins. This will improve productivity and output.

Friends.

My aim is to make India a developed country in one generation. India cannot become a developed country without world class securities and commodity markets. Therefore, I look forward to a growing contribution from all of you in making the financial markets more relevant to this new era. I wish the NISM all success. I also wish everybody a merry Christmas and a very happy new year.

 

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Narendra Modi: The Go-To Man in Times of Crises
November 29, 2023

“I salute the determination of all those involved in this rescue campaign. Their courage and resolve have given a new life to our fellow workers. Everyone involved in this mission has set a remarkable example of humanity and teamwork,” PM Modi said in a telephonic conversation with the rescued workers who were successfully pulled out of a collapsed tunnel in Uttarakhand.

41 workers had been trapped in the Silkyara tunnel for the past 17 days. The rescue operation, involving both advanced machinery and ingenious manual skill, lasted over 400 hours. The remarkable resilience displayed by the trapped workers, the dedicated rescue team, and the overarching administrative efforts collectively exemplify an impressive showcase of grit and perseverance.

This massive operation led by the central and state rescue teams is another example of Modi government’s deep commitment to the principles of federalism. It is also a masterclass in effective and timely mobilisation of resources to address the needs of citizens facing distressing situations.

Operation Ganga: Safely Evacuating Over 20,000 Indian Students from Ukraine
However, this is not something that we are seeing for the first time. Operation Ganga, a monumental effort to evacuate over 22,000 Indian students from Ukraine amidst a war, stands as a remarkable achievement. The mission entailed pooling of substantial resources, the provision of humanitarian assistance and the creation of a safe passage for students to return home. Prime Minister Modi was involved in every intricate detail of the operation—right from logistics to the diplomatic reach-out. In addition, to personally coordinate the entire rescue mission, four Union Ministers were dispatched to four neighbouring countries to Ukraine. On the home front, efforts were made to assuage the concerns of every parent, ensuring they were reassured about the swift and secure return of their children.

This is the Modi government’s ‘whole-of-government’ approach, where swift coordination between diverse ministries, government departments and public agencies leads to coherent action giving exceptional results.

The Machchhu Dam Disaster of 1979
However, the groundwork for Prime Minister Modi's mass mobilization approach was established during the early years of his public service. A striking and pioneering instance of this approach emerged during the Machchhu dam failure, commonly known as the Morbi disaster. It came to known as history’s biggest dam-related disaster unleashing a flood of water through the city of Morbi in 1979, leading to over 25,000 casualties and earning the unfortunate distinction of being the worst dam burst according to the Guinness Book of World Records.

At that time, Narendra Modi, an RSS Karyakarta in Gujarat, undertook extraordinary efforts to assist those affected on the ground. He leveraged the organisational strength of the RSS by mobilising the karyakartas in the time of crisis. He did not stop there. In the demoralizing aftermath, Narendra Modi, in his inimitable style, penned an inspirational letter to motivate the youth in Morbi to rebuild their lives.

The monumental relief efforts in Morbi spanned over a span of over two months, during which Narendra Modi who was an RSS Sangathak in Gujarat, demonstrated exemplary leadership, by personally taking charge and remaining at the forefront until the last bus taking volunteers home departed. Along with RSS volunteers, he assessed the situation and created a detailed plan through which teams were assigned specific tasks to address the different problems arising from the tragedy. Governments can take time before they can choose a course of action. But the 29-year-old worker Narendra Modi, pursued a singular course of action - reaching the people and find ways to alleviate their suffering.

2001 Gujarat Earthquake

Another compelling instance of Narendra Modi's commitment to mobilizing every available resource for swift and effective resolution, is the handling of the devastating 2001 earthquake that shook the state of Gujarat. Even before assuming role as Gujarat’s Chief Minister, Narendra Modi, then a BJP karyakarta, immediately rushed to ground zero to aid the affected.

During the aftermath of the massive earthquake in Bhuj, where Narendra Modi had no official role in the Gujarat government or the party hierarchy, he leveraged his personal network in the Sangh and mobilised the BJP's cadre to provide assistance to the earthquake victims. Witnessed by all, he rode pillion on a motorcycle to assess the damage and come up with potential remediation measures. Collaborating with non-profit organizations, organizing relief camps, distributing food, and coordinating support collection nationwide and internationally, Narendra Modi displayed how far he can go to assist those in need, irrespective of any formal power or position.

Upon assuming the role of Chief Minister shortly after, Modi chose to spend Diwali in 2001 in Bhuj, in solidarity with the earthquake victims. Shortly afterward, CM Modi displayed sensitive leadership when he organized a mass worship offering to Mother Earth, alleviating fears caused by the earthquake.

When faced with the monumental task of rehabilitation, Chief Minister Narendra Modi left no stone unturned in mobilizing the state’s government machinery. In the face of officials estimating a rehabilitation period of at least three years, Narendra Modi, not aloof of ground realities in Gujarat and conscious of the urgency for those who had become homeless and destitute, issued a straightforward directive: Kutch should stand on its feet again in three months. As the first anniversary of the earthquake of 26 January 2002 approached, Kutch not only stood on its feet but also started regaining momentum.

The Uttarakashi Tunnel Rescue materialized into reality only through decisive leadership at the helm which demonstrated a profound concern for those at the grassroots level. India stood to benefit from the hands-on experiences of the Prime Minister, who has witnessed and managed several many disasters and crisis as a RSS swayamsevak, a BJP karyakarta, and later as the head of the state in Gujarat and India.

Today, we see that this personal abilitiy of PM Modi has transformed into institutional power. This ‘whole-of-government’ approach has transformed the governance paradigm in India, and today one can proudly say that it was an all of government, all of India operation.