Taking a swipe at China, Prime Minister Narendra Modi said on Saturday that India’s growth rate of over seven per cent was being achieved in a country that is also a vibrant democracy.
Speaking at the Advancing Asia conference here, he said India dispelled the myth that democracy and rapid economic growth could not go together.
India’s rapid economic growth, he said, was also very distinct in Asia, as the country had never tried to gain in trade at the expense of partners, never undervalued its exchange rate; it rather added to the world and Asian demand by running current account deficits. “We do not follow beggar-thy-neighbour macro-economic policies... We are good Asian and good global economic citizens, and a source of demand to our trading partners,” he said, without naming China, at the three-day conference organised by India and the International Monetary Fund (IMF). The IMF recently included China’s yuan into its reserve currency basket.
Amid global problems, Mr. Modi said, India was a haven of macro-economic stability. In a difficult external environment and despite a second successive year of weak rainfall, “we have increased our growth rate to 7.6 per cent, the highest among major economies in the world... We have improved our economic governance... Corruption and interference in the decisions of banks and regulators are now behind us.”
He said he laid his dream of a ‘Transformed India’ alongside the common dream of an Advanced Asia, an Asia where more than half of the global population can live with happiness and fulfilment.
India and the IMF also announced the signing of a Memorandum of Understanding for establishing the South Asia Regional Training and Technical Assistance Centre. It is expected to become the focal point for planning, coordinating, and implementing the IMF’s capacity-development activities in the region. This will include macroeconomic and fiscal management, monetary operations, financial sector regulation and supervision, and macroeconomic statistics.
The centre will help to address the existing training needs and respond to the demand for IMF training in India, Bangladesh, Bhutan, Maldives, Nepal, and Sri Lanka, while bringing the region’s training volume on a par with those of other regions.
IMF Managing Director Christine Lagarde said: “I would like to thank Prime Minister Modi, Finance Minister [Arun] Jaitley and the Indian government for offering to host the centre and for their substantial financial commitment.”
This will be the first centre that would fully integrate training and technical assistance and would be a model for future capacity development work.
Mr. Modi congratulated Ms. Lagarde on being appointed as Managing Director for a second term and complimented her on successfully persuading all IMF members to ratify the long-pending quota revisions (agreed in 2010) that have come into effect. “The quotas of emerging countries will now better reflect their weight in the world economy... This will give them more say in collective decisions at the IMF,” Mr. Modi said.
Reforms an on-going process, says Modi
Reform of global institutions should be an on-going process, he said, which must reflect changes in the global economy, and the rising share of emerging economies.
“Even now, IMF quotas do not reflect the global economic realities.” The change in quotas was not an issue of increasing the “power” of certain countries. It was an issue of fairness and legitimacy.
He also welcomed the IMF's decision to finalise the next round of quota changes by October 2017.