On the eve of his visit to Japan, Prime Minister Manmohan Singh spoke to the Japanese media on the agenda of his visit. Here’s an excerpt:
Mr Prime Minister, thank you very much for you time. My first question will be on Indo-Japanese relationship. Are there any changes in your agenda for the summit-level meeting in Tokyo in view of the change of government in Japan, particularly Mr Shinzo Abe, our prime minister, is considered to be a great friend of India? Also how do you think of economic policy of Mr Abe like Abenomics and diplomatic policy including our negotiations on civilian nuclear deal? Yesterday we heard (India’s foreign secretary) Mr (Ranjan) Mathai say he wants to see more progress on this issue by the end of the year.
We have the annual tradition of a summit between India and Japan. This visit was to take place in November last year but because of understandable reason it had to be postponed. I am now looking forward very eagerly to meeting Prime Minister Abe whom we know in our country as a very special friend of India, and people of India remember with great fondness his visit to our country in 2007 and his memorable address to the two Houses of our Parliament.
Prime Minister Abe and I would review the state of Indo-Japanese relations. I am of the view that both in India and in Japan there is all-round agreement that our two countries must have robust strategic and global partnership. Therefore, it will be my effort to use this visit to strengthen our global and strategic partnership, and that also includes trying to reach out an agreement with regard to civil nuclear energy cooperation. I do hope that we can make progress in the civil nuclear energy cooperation field as well.
As far as Prime Minister Abe’s economic policies are concerned, we believe that whatever can be done to revive and give a new push to the Japanese economy is good for Japan, it is good for Asia, it is good for India. Therefore, we earnestly hope and pray that Prime Minister Abe’s economic policies succeed in giving a new push and a new momentum to Japanese economic growth, and the initial results of the last few weeks are very encouraging. We wish the Japanese people the best of luck in tackling the economic situation in Japan.
Mr Prime Minister, what is your analysis of the current economic situation in India? And what in your opinion needs to be done for the economy to bounce back to a growth rate of eight per cent? And what are India’s expectations in terms of Japanese investment? And what sector, what industry would they like to see investment coming in from Japan?
If you leave aside last year’s economic performance, in the previous nine years the Indian economy has grown at the average annual rate of about eight per cent per annum. This is the highest rate of growth achieved by India in any previous decade. Last year our growth rate declined to about five per cent for very special reasons, partly because of the recession in the global economy, Eurozone output and incomes declined, Europe was in recession, the American economy was also slow moving, and even Japan’s economy was also in the slow rhythm process.
We had also some domestic reasons because several projects which were listed, which were included in our development plan got held up because of regulatory problems with regard to environment clearance, with regard to availability of coal and other inputs. Now we are trying to tackle all these issues. Our hope is that in the current year our growth rate will go up to six to 6.5 per cent and in the next two or three years, we are confident of returning the Indian economy back to the eight per cent growth rate.
Now you will ask me what convinces me that this will happen. One thing that I would like to point out, in the last few years Indian savings rate was as high as about 35 per cent of the GDP. It has declined recently to about 30 per cent and our investment rate is still very high, about 35 per cent. A capital output ratio of 4:1, a savings rate of over 30 per cent, an investment rate of 35 per cent, will easily yield a growth rate of about eight per cent.
So, our principal concern is to strengthen the impulses to accelerate the process of investment, particularly the investment in infrastructure which has been a big bottleneck which has held up our growth process. We would like to remove these bottlenecks. We have set up the Cabinet Committee on Investment to look at precisely the bottlenecks which hamper the growth of infrastructure sector. And we are hopeful and confident that this will happen. And as I said, this year our growth is likely to go up to about six to 6.5 per cent.
Now, in all this, we require robust participation of Japanese business, Japanese industries in India’s economic development. Today we have more Japanese companies operating in India that ever before. But in terms of their contribution to Indian growth process, much needs to be done. We have plans to invest about one trillion US dollars in infrastructure in this Twelfth Five-Year Plan, that is, 2012 to 2017. And I see an enormous role for the Japanese industry to contribute not only to infrastructure development of India, but also to accelerate the tempo of manufacturing sector in India’s economy.
We have of course the shining example of Maruti Suzuki, but more such examples could be created. We need Japanese investment in energy, in clean energy, in renewable energy. We would like Japan to repeat, for example, what Japan has done for India in Delhi Metro. We would like more Metros to come up in our metropolitan cities. And in all these areas I see enormous opportunities to strengthen cooperation between India and Japan. I invite the business community of Japan to take full advantage of the enormous opportunities that are opening up in a liberalised Indian economy.
As corruption and malfeasance among politicians and bureaucrats persist and as opening of its market has become bogged down, a number of businessmen are losing confidence in India’s future economic growth. Is India trying to make genuine efforts to fix its long-standing internal problems? What do you think are the impediments to India’s further growth and how do you plan to tackle them?
India’s recent growth performance should be seen in the backdrop of a generalised slowdown in the developed world, with some major Western economies even being faced with recession. While our growth dipped to five per cent last year, I am confident that we will regain our long term growth trajectory of eight pc. Our fundamentals remain strong. Domestic consumption demand in India is a healthy proportion of our GDP. Our population is young and energetic. My government has put the focus on quality, sustainability and inclusiveness, which will create long-term conditions of economic growth.
We have introduced a series of reforms in the past months for fiscal consolidation and to boost investment and stimulate growth. These include incentives for investments and liberalisation of foreign investments, introduction of further reforms in the financial markets, banking sector and tax systems. We have accelerated the implementation of large infrastructure projects. These are only initial steps in what will be a sustained effort to revitalise the economy.
There are already some encouraging signs. Our fiscal deficit is being contained. Foreign institutional investment has grown. Our main stock market index has risen appreciably over the past few months. Let me reassure you that the reforms will continue. We are also taking a number of measures for clean, transparent and responsive governance.
To sustain rapid, inclusive and sustainable growth, we need to focus on infrastructure; continue to invest in social infrastructure; equip our youth with education and skills for the modern economy; invest in human development in all aspects; maintain the momentum of growth in agriculture; and ensure availability of adequate, affordable and clean energy for powering our growth.
Sir, how about the BRICS Bank? Do you have any opinion about the BRICS Bank?
It is an idea which requires lot of further examination. We would I think the developing countries to look at the prospects of south-south cooperation, and the BRICS Bank is an example of that. But we have many many miles to cross before we can say that this idea has really come to a stage where it can take practical shape.
What is the view of Prime Minister Manmohan Singh on the steps needed to strengthen maritime security in the region by both India and Japan, collectively and otherwise, in view of maritime threat from China?
Both India and Japan are important maritime nations. Therefore, safety and security of the sea lanes of communication, especially in the Indian and PacificOceans, is vital for both countries. India supports freedom of navigation and unimpeded lawful commerce in international waters, and right of passage in accordance with accepted principles of international law. We believe that where disputes exist, they should be peacefully resolved by concerned parties through negotiations. This is essential for peace and stability in our region.
Maritime cooperation and coordination between India and Japan has grown. India and Japan launched bilateral naval exercise last year. We started a new dialogue for discussing maritime affairs, including maritime security challenges. These activities are not aimed against any third country, but are meant to advance our shared interests. As you may be aware, in anti-piracy operations in the Gulf of Aden, India, Japan, the Republic of Korea and China coordinate escort schedules for merchant ships. This is an example of practical cooperation between Asian countries.
How do you see the liberalisation of trade in the Asia Pacific region, especially with regard to RCEP and TPP? What is India’s stand?
Trade liberalisation and economic integration can make a major contribution to advancing prosperity and economic development across the entire Asia-Pacific region. India is part of the great process of economic integration under way in East Asia. Like Japan, we are a founder member of the East Asia Summit. We are participating in the negotiations on a Regional Comprehensive Economic Partnership. We are not a part of the Trans-Pacific Partnership, and we are studying its implications. Regional trading arrangements, however, should not be at the cost of an open, multilateral trading system. We are also concerned about protectionist tendencies in many parts of the world.
My question will be on the security environment of Asia-Pacific region. In order to maintain peace and stability in the region, what kind of role does India want to play, and what kind of role does India want Japan to play? How do you foresee the future relationship with Pakistan’s newly-elected government?
India has vital stakes in security, stability and prosperity in the Asia-Pacific region. Our shared values, our convergent interests and the potential of our economic partnership anchor our Strategic and Global Partnership. This partnership is indispensable for promoting deeper regional economic integration, cooperation and connectivity, maritime security and the emergence of a rule-based, open and balanced regional architecture. I look forward to discussing with Prime Minister Abe ways in which we can advance those goals.
We see the recent elections in Pakistan as a historic moment of opportunity, since for the first time an elected government has completed its full term and a political transition has taken place through democratic elections. I have consistently advocated peaceful, friendly and cooperative relations with Pakistan. We have sought to pursue dialogue for the resolution of all issues, in an atmosphere free of terror and violence. I look forward to working with the new government in Pakistan to take forward our relations.
The Japanese government is expected to offer support to build High Speed Train in India including financial assistance. What kind of agreement do you expect with the government of Japan regarding the introduction of Japanese High Speed Train Shinkansen? What is needed for your government to choose the Shinkansen as High Speed Train system in India?
Indian Railways have looked into the possibility of High Speed Rail corridors for passenger traffic in their long term perspective plans. Japan’s Shinkansen system is well known for its efficiency and safety record. Such capital-intensive projects will be considered in accordance with our infrastructure requirement, national priorities and financial resources. We welcome Japan’s interest and would be happy to look at Japan if we decide to take up High Speed Railways in India.