I believe that you are quite familiar with India's early experiments with a socialist model as well as our recent experience in liberalisation and economic reforms. The first four decades after independence turned out to be a period of mixed results. There were some successes on the economic front. The Green Revolution gave us a measure of self-sufficiency in food. We developed a highly diversified industrial base. The financial sector expanded rapidly and penetrated into most parts of the country. However, the economy recorded insipid rates of growth. In the first 30 years, GDP grew at an average of about 3.5 per cent per annum.
There was an improvement in the eighties to an average of 5.6 per cent per annum. When even moderate growth became unsustainable, and there was a threat of collapse, India made a decisive shift in 1991. In the nine years ending 1999-2000, the average growth rate of GDP was 5.8 per cent a year. After a temporary setback, the average growth during the last four years -- 2003-04 to 2006-07 -- has increased to an impressive 8.6 per cent. 2006-07, in particular, was a splendid year. GDP grew at 9.4 per cent. The rate of industrial growth reached 10.9 per cent. And the services sector maintained its robust performance and achieved a growth rate of 11 per cent.
The upsurge in economic growth has been accompanied by a marked increase in the rate of savings and investment in the economy. Gross domestic capital formation as a proportion of GDP increased to 33.8 per cent in 2005-06 and is estimated to have increased further in 2006-07. Given the thrift habits of the Indian people, and the growing size of the workforce, both savings and investment rates are expected to show further improvements in the years to come. The demographic profile of India is working in our favour and the size of our working-age population exceeds, and will continue until 2030 or 2035 to exceed, the number of dependent persons.
The domestic challenge is to make growth more inclusive. 26 per cent of the population of India lives in poverty. A large number of people have limited or no access to education or healthcare. Basic services such as drinking water, sanitation, electricity, road connectivity and housing are not available to large sections of the people. A high rate of growth of GDP would have little meaning to the poor and the disadvantaged unless there is a visible improvement in their living and working conditions. Hence the emphasis on 'inclusive growth' and the effort to devise programmes and plans that address the felt needs of the poor.
The external or global challenge is to integrate the Indian economy with the global economy and remain competitive. We recognise that the world is an unequal -- and sometimes cruel -- place. We do not seek charity. We seek an open, rule-based system of world trade; we seek open markets; we seek knowledge and technology; and we stress that new forms of exploitation are as pernicious as colonialism that was buried many decades ago.
India, within years of its birth, accepted responsibilities that other countries of the world or international bodies placed on its shoulders. India was a peace-keeper in many troubled areas; India was a mediator. India cautioned the countries against dividing the world into two warring camps and, therefore, advocated non-alignment and the five principles to end the Cold War. India, at 60, recognises that the world, after the Cold War has ended, is a very different place. Let me assure you that India, today, is a more confident nation and will play its part in global affairs.
Excerpts from the speech of Finance Minister P Chidambaram on 'India at 60', in Berlin on September 18, 2007)
