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India’s Biggest Challenge: Pursuing Reforms Needed to Sustain 8% Growth for Decades

MD Staff



With India expected to achieve 7.6% GDP growth this year and its global competitiveness rising, the country is at an inflection point, business, government and academic leaders told participants in the opening plenary of the World Economic Forum’s 32nd India Economic Summit. “The biggest challenge is to have sustainable growth of 8% for a couple of decades,” said Gita Gopinath, Professor of Economics at Harvard University. “Can India sustain this growth across political cycles?” To keep that pace of progress would entail further structural and institutional reforms, argued Gopinath, a Summit Co-Chair. “But if that is done, then it will be mind-blowing for India.”

“It is achievable,” declared Nirmala Sitharaman, Minister of State for Commerce and Industry of India. “Across the states, we see that urge now – to see brighter days and to find the issues where we can come together, removing obstructions [to doing business] and moving forward on using technology.” John Rice, Vice-Chairman of GE in Hong Kong SAR and another Summit Co-Chair, agreed. “It is sustainable, but you have to think what is required for the 21st century and the Fourth Industrial Revolution. With the convergence of digital and industrial, a different set of skills is required to win,” he said. The Indian government has the responsibility to ensure that people receive the necessary training. Added Rice: “You have to make sure you are investing in the right things, including basic infrastructure. You can’t do it if you have 200 million people without electricity.”

The opportunities for India and its 1.3 billion people are “tremendous”, said fellow Summit Co-Chair Anil Agarwal, Executive Chairman of Vedanta Resources in the United Kingdom. “I have never felt this buzz about India in the last two decades.” The prospects for small and medium-sized enterprises are especially good, he noted. In particular, development of India’s natural resources would contribute significantly to eradicating poverty, Agarwal explained. India’s many entrepreneurs are focusing on the domestic market, observed Summit Co-Chair Vijay Shekhar Sharma, Founder and Chief Executive Officer of Paytm, an Indian e-commerce company based in Noida, an industrial development in the National Capital Region. “For the first time, Indians are very proud of producing for India. Indian entrepreneurs are now accepting that we should build something for India, working for technology that will serve Indians.”

The impact that Indian entrepreneurs have had on Silicon Valley is proof of India’s edge in technology and innovation. “I greatly believe in it,” said Amitabh Kant, Chief Executive Officer of NITI Aayog, or the National Institute for Transforming India, a government policy think-tank. “India is used to innovating. But India needs to innovate in urbanization, sewage and for clean water. It has to innovate for people.” India’s start-ups “will disrupt the world,” predicted Kant, also a Co-Chair of the Summit. “They will disrupt health, education. They will do a lot more social innovation.”

“The promise of India has always been there,” said Johan C. Aurik, Global Managing Partner and Chairman of the Board of global consulting group A.T. Kearney in the US and a Summit Co-Chair. He remarked that India has broken into the ranks of the top 10 destinations for foreign direct investment in the world. “The government has become the facilitator of change,” he said, applauding the “Make in India” initiative launched by Prime Minister Narendra Modi in 2014 to encourage foreign and domestic companies to manufacture products in the country and create millions of jobs. “The challenges will be daunting with the Fourth Industrial Revolution and the tensions between jobs and digital developments,” Aurik reckoned. “But we have to make sure that progress is inclusive.”

In remarks earlier in the session, Ranil Wickremesinghe, Prime Minister of Sri Lanka, said that, to drive new economic growth, it is critical for his country and its neighbours to build partnerships not just within South Asia, but also across the world, particularly in South-East Asia, Japan, Korea and Europe. Asia has emerged as an economic growth engine of the world, he said. And, while the West may have written the rules of globalization so far, “Asia will bail out the world” and will move to create its own system. He told participants that he and Indian Prime Minister Modi aim to conclude the Economic and Technology Cooperation Agreement (ETCA) by the end of this year. Sri Lanka is also working with five southern Indian states on a sub-regional cooperative arrangement. “We have the potential to work together,” Wickremesinghe said. “Let’s have the whole area around the Bay of Bengal be a vibrant place of economic cooperation. The growth is here.” Colombo is also discussing a free-trade agreement with Singapore.

In a video message to welcome participants, Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, said that India has to continue its efforts to promote inclusion and master the challenges posed by the rapid technological changes of the Fourth Industrial Revolution. “Inclusiveness in India and in the world will be one of the most decisive objectives the world community and Indian society have to achieve,” he said.

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Partnerships key to promoting economic empowerment for rural women in the MENA region




The economic empowerment of rural women in the Middle East and North Africa (MENA) region was the topic of a side-event organized by the governments of Italy and Tunisia, in cooperation with the United Nations Industrial Development Organization (UNIDO), UN Women and the Food and Agriculture Organization (FAO).

The event featured a range of high-level speakers from Italy, the MENA region, UN agencies and non-governmental organizations, and was moderated by Omar Hilale, Permanent Representative of the Kingdom of Morocco to the United Nations in New York. “Women face several barriers to their equal participation in the social, economic and political spheres, and these constraints are felt even more harshly by rural women,” he stated in his opening remarks.

Fatou Haidara, Managing Director of Corporate Management and Operations at UNIDO, highlighted the significance of industrialization in reducing poverty and increasing employment, and the positive benefits of this for women. She referred to the holistic approach adopted by UNIDO in its work in promoting women’s empowerment and entrepreneurship in the MENA region, stating that both policy and capacity-building dimensions are crucial.

“We have facilitated an ecosystem of knowledge and support, successfully partnering with governments and the private sector to create the foundation for structural change that has mobilized women’s entrepreneurship throughout the region,” she said. “For UNIDO, this project is one step forward in our long-term strategy for enabling women’s economic independence, because the resulting benefits will go beyond women and girls to put us all on the path to achieving the 2030 Agenda.”

The importance of integrating women into the political system was stressed by Neziha Laabidi, Minister of Women, Family and Childhood of the Government of Tunisia, who also highlighted the inclusion of women in Tunisia’s national, multi-sectoral strategy.

Teresa Bellanova, Deputy Minister of Economic Development of Italy drew attention to Italy’s commitment to promoting women’s rights and gender equality and to supporting women entrepreneurs and capacity-building at the local level in light of the radical, recent economic and geographical changes shaping the MENA region’s reality.

The discussion also touched upon issues faced by women in the region, such as access to land rights and discriminatory socio-cultural norms. The need for partnerships to come up with integrated solutions to such issues was addressed by Mohammed Naciri, Regional Director for Arab States, UN Women.

Engagement with the financial sector, including making capital more easily accessible to rural women, was underlined as a key factor in empowering rural women by Emanuele Santi, founder and president of Afrilanthropy, which connects social start-ups in Africa to impact investors. Santi added that creating incentives – for example by giving bonuses to companies that invest in companies led by women and rural women in particular – was another key to success. Finally, he stated that the development community had to “work as an ecosystem” and blend financial support with non-financial support.

The event was held on the sidelines of the Commission on the Status of Women (CSW), an annual two-week session at the United Nations in New York. The CSW is the principal global intergovernmental body exclusively dedicated to the promotion of gender equality and the empowerment of women.

Speaking at the opening of the CSW, UN Secretary- General, António Guterres, stated that the Commission was “leading the way” when it comes to empowering women. “When women are already taking action, we need to listen to them and to support them,” he said. “By building equality, we give women a chance to fulfil their potential. And we also build more stable societies.”

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Four countries on track to graduate from UN list of least developed countries




Four countries could soon “graduate” from the ranks of the world’s poorest and most vulnerable nations, a United Nations expert committee announced on Thursday

Bhutan, Kiribati, Sao Tome and Principe and the Solomon Islands have increased national earning power and improved access to health care and education, making them eligible to exit the group of least developed countries (LDCs).

“This is an historic occasion,” said Jose Antonio Ocampo, chair of the Committee for Development Policy (CDP), noting that only five countries have graduated since the UN established the LDC category in 1971.

LDCs are assessed using three criteria: health and education targets; economic vulnerability and gross national income per capita.

Countries must meet two of the three criteria at two consecutive triennial reviews of the CDP to be considered for graduation.

The Committee will send its recommendations to the UN Economic and Social Council (ECOSOC) for endorsement, which will then refer its decision to the UN General Assembly.

For CDP member Diane Elson, a professor at the University of Essex in the United Kingdom, Thursday’s announcement was good news for millions of women in rural areas.

She pointed out that the latest session of the UN Commission on the Status of Women (CSW), currently under way in New York, is discussing the challenges facing this population.

“The success of the countries that are graduating reflects things like the improvement of the health and the education of the population, which extends to rural women, and the increase in incomes in the country, which extends to rural women,” she said.

However, Ms. Elson stressed that the countries will need continued international support because they remain vulnerable to external shocks, including the impact of climate change.

Mr. Ocampo said this vulnerability is particularly evident in Pacific Island states such as Kiribati.

Globally, there are 47 LDCs, according to the UN Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States.

The majority, 33, are in Africa, while 13 can be found in the Asia-Pacific region, and one is in Latin America.

In the 47 years of the LDC category’s existence, only five countries have graduated (Botswana, Cabo Verde, Equatorial Guinea, Maldives and Samoa)

The CDP said two more countries, Vanuatu and Angola, are scheduled for graduation over the next three years.

Nepal and Timor-Leste also met the criteria but were not recommended for graduation at this time, due to economic and political challenges.

That decision will be deferred to the next CDP triennial review in 2021, according to Mr. Ocampo.

Bangladesh, Lao People’s Democratic Republic and Myanmar met the graduation criteria for the first time but would need to do so for a second time to be eligible for consideration.

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ADB, India Sign $120 Million Loan to Improve Rail Infrastructure




The Asian Development Bank (ADB) and the Government of India today signed a $120 million loan agreement to complete double-tracking and electrification of railway tracks along high-density corridors in India and improve operational efficiency of the country’s railway networks.

The $120 million financing is the third tranche of a $500 million financing facility for the Railway Sector Investment Program approved by ADB’s Board in 2011. The loan amount will be used to complete the ongoing works started in the project’s first two tranches.

The agreement was signed by Kenichi Yokoyama, ADB Country Director for India, and Sameer Kumar Khare, Joint Secretary (Multilateral Institutions) of the Department of Economic Affairs in the Ministry of Finance, at a ceremony in New Delhi.

“The program will help develop energy efficient, safe, and reliable railway systems that will result in reduced travel time along project rail routes and also reduce annual accident rate,” said Mr. Khare.

“Funding for the project’s third tranche will contribute toward achieving the overall program outputs of double-tracking about 840 kilometers (km) of rail routes and electrification of 640 km of tracks along high density corridors,” said Mr. Yokoyama. “The program is also helping implement new accounting systems and provide additional safety measures including collision avoidance equipment.”

The investment program is targeting busy freight and passenger routes in the states of Andhra Pradesh, Chhattisgarh, Karnataka, Maharashtra, and Odisha, including the “Golden Quadrilateral” corridor that connects Chennai, Kolkata, Mumbai, and New Delhi. The doubling of rail sections is being implemented along Daund-Titlagarh section, Sambalpur-Titlagarh section, Raipur-Titlagarh Section, and Hospet-Tinaighat section, while electrification is being undertaken along the 641-km Pune-Wadi Guntakal section.

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