Remarks by Angel Gurría
28 February 2017
New Delhi, India
(As prepared for delivery)
Honourable Minister, Director General, Members of the Board, Ladies and Gentlemen,
I would like to thank the Minister and the Confederation of Indian Industry (CII) for inviting me to address this esteemed group of government and business representatives.
The OECD’s collaboration with India is one of our most important partnerships. This is a relationship that has increased in its richness, mutual respect and utility for both parts. It is a humbling and enriching experience to engage with India. We learn a lot from this country, and we think there is also a lot we can share with India. I am delighted to be here.
We meet at critical times. Eight years have passed since the burst of the subprime crisis, and global annual growth is still hesitant, stumbling at around 3%. Trade growth is even slower and investment growth remains weak. Most of the signs of the low-growth trap that we have been talking about for a long time are still there.
The near-term prospects for most emerging economies look better than the outcomes over the past couple of years, when many resource-dependent EMEs were hit by the downturn in the prices of oil and other key commodities. But projected growth rates in 2017 are still generally lower than expected a couple of years ago, and much lower than foreseen 5 years ago.
Our latest 2017 Economic Outlook for Southeast Asia, China and India expects growth in the region to average 6.2% per year between 2017 and 2021, still very high, but somewhat lower compared to 6.5% in 2016 and 6.6% in 2015. Latin America is recovering, but it will grow by only about 1% in 2017.
And the situation and outlook in developed and developing economies alike are now more uncertain, especially given the risk of a trade confrontation between the United States and other major trading nations.
In this complex context, India has weathered the storm relatively well. Earlier today, we launched the 4th OECD Economic Survey of India with Secretary Shaktikanta Das and reported on some encouraging dynamics. The recent acceleration of structural reforms, including loosened investment restrictions and simplified administrative business procedures, have brought new growth impetus to India.
India’s GDP per capita has grown by over 5% per annum since the mid-1990s. In fact, with growth rates averaging 7% since 2014, India is the fastest growing G20 economy, and the OECD projects that this will remain true in the coming years.
Looking ahead, the implementation of the goods and services tax (GST) reform is expected to transform India into a single market, boosting competitiveness, investment and job creation.
In addition, the Union Budget – being debated in Parliament today – proposes aligning Indian transfer pricing provisions with those recommended by the OECD, thereby reflecting India’s commitment to OECD work on tackling international tax evasion. These are indeed very relevant achievements. But there is no scope for complacency.
India continues to face important challenges. Providing quality jobs, ensuring productive investment and a sustained standard-of-living to support the growing young and middle-class population will be vital to sustaining strong private consumption.
In addition, while India has lifted 140 million people out of poverty, almost 240 million still lack access to electricity. The differences between urban and rural areas are great, and as India's urbanisation process progresses, measures to ensure sustainable and inclusive growth need to be put in place. Moreover, gender inclusion remains an important challenge; for example, between 2005 and 2014 female labour participation declined from 36.9% to 27%.
Economic growth has also come at a price, namely pollution and environmental challenges. Total CO2 emissions in India are increasing and air quality is often very bad. This is largely associated with industrial and traffic pollution; while the use of biomass for household cooking and heating has led to high levels of indoor pollution. Water stress is also an important issue for India. Irrigation increases and subsidised electricity for farmers have led to the unrestrained exploitation and depletion of ground water.
To help tackle some of these challenges, the OECD has been working with the government on several fronts. Let me outline some which we consider particularly important.
Our work with the Ministry of Commerce and Industry has focused on creating a robust and competitive environment for investment as well as promoting responsible business conduct and analysing the importance of services for growth and jobs.
We have also partnered with the Securities and Exchange Board of India (SEBI) to improve financial education – especially for women – and to apply regulations on financial consumer protection and corporate governance in order to build consumer confidence.
Our work with the Competition Commission focuses on strengthening the enforcement capacity and ensuring the efficient implementation of competition law by international standards.
India’s Energy and Resources Institute (TERI) is an important knowledge partner in the Green Growth Knowledge Platform, and we recently worked with them to organise a conference on fiscal instruments for a green economic transition.
Last but not least, through BIAC and its members, such as the CII, we are also building a fruitful collaboration with the Indian business community to implement regulations which improve competitiveness. For example, in recent years, we have jointly conducted in-depth policy dialogues and analyses with the CII on education, innovation and inclusive growth, anti-corruption, and integration into Global Value Chains. We are also glad to count on the participation of the CII and some of its members in the Emerging Markets Network of the OECD Development Centre, of which India is a member since 2001.
I am therefore happy today to announce that we will reinforce our collaboration through the signature of an MOU focused on promoting further economic, social, governance and environmental change.
Before I conclude, let me highlight that we have also been active with India in international fora such as the G20 and the B20. We have, for example, contributed to fostering new sources of growth by supporting innovation, promoting inclusive trade and investment, and reinforcing food security and agriculture productivity.
Ladies and gentlemen:
As the representatives of India’s industry, you hold the keys to your country’s engine. You are the innovators, the entrepreneurs and you bear great responsibility in helping India develop its full potential. And this is a target that we surely share: India’s impressive growth has to become ever more inclusive, so that the enormous potential of this great nation turns into a great equaliser of opportunities and well-being. This is something that both India and the world need.
As Prime Minister Narendra Modi said: “We should walk together, work together and progress together. We should move ahead with this mantra.”
The OECD stands ready to support you and India in your efforts to deliver better, more inclusive and more sustainable policies, for better lives.