My colleagues in government,

Friends and Distinguished Guests from India and abroad,

I am happy, to be here today, to address the Sixth Delhi Economics Conclave. This is a good platform for bringing together economists, policy-makers, and thought-leaders, from India and abroad. I compliment the Ministry of Finance for organising it.

Your topic of discussion is JAM, that is, Jan Dhan Yojana, Aadhaar and Mobile. This JAM vision, will serve as the bedrock of many initiatives to come. For me, JAM is about Just Achieving Maximum.

- Maximum value for every rupee spent

- Maximum empowerment for our poor

- Maximum technology penetration among the masses

But let me start by taking a brief look at the Indian economy. By almost every major economic indicator, India is doing better, than when we took office 17 months ago.

• GDP growth is up and inflation is down.

• Foreign investment is up and the Current Account Deficit is down.

• Revenues are up and interest rates are down.

• The fiscal deficit is down and the rupee is stable.

Obviously, this did not happen by accident. And the world economy is not exactly doing well. This success, is the result of a series of well thought out policies. Many of the purely macro economic reforms we have undertaken, are probably well known to this audience. We have embarked on a course of fiscal consolidation. We have entered for the first time into a monetary framework agreement, with the Reserve Bank to curb inflation. Even while cutting the fiscal deficit we have substantially increased productive public investment. This has been made possible in two ways. Firstly, we have imposed, carbon taxes on fossil fuels. We took the bold step of de-controlling diesel prices and thereby eliminated energy subsidies. We have replaced them with taxes. The coal cess has been increased by four times from ₹ 50 per ton to ₹ 200 per ton. Globally, there is much talk of carbon taxes but much of it is just that - TALK. We have actually acted. Secondly, we have reduced wasteful expenditure through innovative methods like the use of technology. Some of the methods, are part of your agenda, such as using Aadhaar to target subsidies to the deserving. These are reforms that you are probably aware of. But our reforms are far broader, and far deeper, than is generally recognised.

Before I elaborate on this, I would like to raise two issues. The first is, REFORM FOR WHAT? What is the aim of reform? Is it just to increase the measured rate of GDP growth? Or is it to bring about a transformation in society? My answer is clear. We must REFORM TO TRANSFORM.

The second question is, REFORM FOR WHOM? Who is the target audience? Is our aim to impress groups of experts and score points in intellectual discussions? Or to achieve ranks in some international league table? Again, my answer is clear. Reform is that which helps all citizens, and especially the poor, achieve a better life. It is Sabka Saath, Sabka Vikas.

In short, reform is not an end in itself. Reform for me, is just a way station on the long journey to the destination. The destination is transformation of India. Therefore, REFORM TO TRANSFORM. And reforming to transform, is a marathon, not a sprint.

The reforms we have undertaken, are of many types. For simplicity, I will classify them as financial, structural and institutional. It will not be possible for me to cover all of them here. But I will certainly mention some of the most important.

Let me start with the financial reforms. We talk often about interest rates and credit policy. Changes in interest rates are debated for months. Tons of newsprint and hours of television are spent on it. Interest rates are no doubt very important. But are they important to a person locked out of the banking system? To a person who has no prospect of ever lending or borrowing from a bank? And if large sections of a country are in this position then how important are interest rates? It is for this reason that development experts have been advocating financial inclusion. What we have done in the last 17 months is to bring one hundred and ninety million people into the banking system. This is more than the population of most of the countries in the world. Now these millions are part of our banking system, and words like ‘interest rate’ have a meaning for them. Not only have these people been brought into the system but they have shown that there is great strength at the bottom of the pyramid. Believe it or not, accounts opened under the Jan Dhan Yojana today have a total balance of almost ₹ 26,000 crores or nearly four billion dollars. Clearly our financial inclusion reform has been transformational. And yet this quiet revolution has hardly been noticed.

The Jan Dhan Yojana has also transformed the ability of the poor to make and to receive electronic payments. Every Jan Dhan account holder is eligible for a debit card. India’s banks are also being encouraged to operate ‘mobile ATMs’. A mobile ATM is one where cash can be drawn and simple banking tasks done through a hand held device. Thanks to Jan Dhan Yojana and the RuPay debit card, we have also introduced healthy competition in the debit-credit card space. This has traditionally been dominated by a few international players. Even one year ago, there were hardly any indigenous card brands in the market. Today, 36 % of debit cards in India are Ru-Pay cards.

Financial inclusion is not just about opening bank accounts or enabling electronic payments. I firmly believe, that India has tremendous entrepreneurial energy. This needs to be harnessed so that we become a nation of job-creators, rather than job seekers. When we took office, we found that 58 million non-corporate enterprises provided one 128 million jobs. 60% of them were in rural areas. Over 40% were owned by people from the Backward Classes and 15% by Scheduled Castes and Tribes. But bank credit accounted for a tiny share of their financing. Most of them never get any bank credit. In other words the most employment-intensive sector of the economy gets the least credit! While Jan Dhan Yojana was to bring banking to the unbanked the second reform was to bring funding to the unfunded. We are creating a new financing and regulatory architecture under the Micro-Units Development and Refinance Agency scheme popularly known as MUDRA. Already under the Pradhan Mantri Mudra Yojana banks have provided More than six million loans to small businesses for a total value of nearly ₹ 38,000 crores or six billion dollars. If one conservatively estimates that each loan creates 2 jobs we have laid the foundation for 12 million new jobs. Even Rs Two Hundred Thousand crores invested in the corporate sector would not produce this many jobs. We have now launched a programme where each branch of each bank that is a total of 125,000 bank branches will assist one Dalit or a Scheduled Tribe person and one woman in starting a business. We are also creating an environment that fosters innovation and start-ups through the Atal Innovation Mission and the Self Employment and Talent Utilisation programme.

Another financial reform is the provision of a safety net through new social security schemes. We have introduced three non-subsidised but low cost schemes covering accident insurance life insurance and pensions. Because of their massive coverage the premia are low. There are now over 120 million subscribers.

For many of these reforms to be successful we need a strong banking system. We inherited a system where cronyism and corruption were believed to be rampant in banking decisions and in appointments to public sector banks. After the first ever retreat of a Prime Minister with bankers, known as the Gyan Sangam, we have moved decisively to change this. Major steps have been taken to improve efficiency, including clear performance measures and accountability mechanisms. We have made a commitment to ensuring adequate capital.

But more than that there have been very powerful non-financial steps. Interference in banking decisions has ended. A new process for appointments is being put in place under the Bank Boards Bureau. Credible and capable bankers have been appointed to head banks. For the first time since banks were nationalised 46 years ago private sector professionals have been appointed in key positions. This is a major reform.

There is a whole eco-system focused on alleviating poverty. Perhaps this can be called the ‘poverty alleviation industry’. Obviously the intentions are good. Well designed schemes and subsidies do have an important place. But empowering the poor is far more effective than empowering the poverty alleviation industry. Our financial reforms empower the poor to fight poverty themselves. I can take the analogy of a house. The foundation and basic structure occupies some of the costs. Then come the fixtures, fittings and furniture. If the foundation and structure are weak any investment in nice fittings or attractive floor tiles or beautiful curtains is unlikely to last long. So also, empowering the poor through financial inclusion and social security will provide a more stable and lasting solution.

Let me now turn to structural reforms in various sectors.

Agriculture remains India’s mainstay in terms of providing livelihood. We have introduced a series of reforms. There was a tendency to divert subsidised fertiliser for the production of chemicals. A simple but very effective solution is neem-coating of fertiliser which makes it unsuitable for diversion. This had been tried on a small scale earlier. We are now moving towards universal neem-coating of urea. This has already saved crores of rupees of diverted farm subsidies. It is an example of how simple reforms can be very effective.

We have introduced a Soil Health Card nationally which tells every farmer the condition of his or her soil. It enables the farmer to choose the right quantity and mix of inputs. This greatly reduces wastage of inputs and increases crop yield besides protecting the soil. By reducing unnecessary chemical inputs, it is also good for health of consumers. It enables farmers to choose the best crop for their soil. Many farmers have been unaware that their land is actually more suited for a different crop. In economic terms, it is a win-win-win-win. It reduces costs, increases yields, improves the environment and protects the health of consumers. 140 million soil health cards will be issued, requiring a collection of over twenty-five million soil samples. They will be tested through a nationwide network of nearly 1500 laboratories. About four million samples have already been collected. This too is a reform to transform.

We have launched a housing for all program - one of the most ambitious in the world. It involves building twenty million urban houses and thirty million rural houses, totalling nearly fifty million. The programme will make sure no Indian is houseless. It will also generate a large amount of employment mainly for the unskilled the semi-skilled and the poor. This multi-pronged program is also a transformative reform.

Much has been said and written about India’s labour markets. We have already undertaken some important steps. Many workers in the organised sector have suffered when changing jobs by being unable to access provident fund and other benefits. The benefits accrued under one employer become difficult to account for under another employer. We have introduced a Universal Account Number which will remain with an employee even when he changes jobs. This greatly improves labour mobility and makes life easier for employers and employees.

We have gone a step further We have started empowering the unorganised sector employees by giving them a Universal Identity Number and providing certain minimum social security benefits to them. Over a period of years, this will have a major impact on the quality of employment in India.

Before becoming Prime Minister, I had received many inputs about the reforms needed in India from many economic experts. However, none of them touched on the issue of cleanliness and sanitation. Sanitation has languished for years as a poor cousin of health or of drinking water supply. It has often been viewed as a question of budgets and projects and expenditure. Yet, you will all agree that poor sanitation and lack of cleanliness is much more than an issue of health. It touches upon every aspect of our well-being. It is of particular importance to women. Our Swacch Bharat or Clean India campaign will impact not only health and sanitation but also uplift the status and security of women and above all create a powerful sense of well-being. If this reform succeeds, as I am confident it will, India would have been transformed.

We have undertaken major managerial improvements in the transport sector. Our major ports have seen a 5% growth in traffic and an 11% increase in operating income in 2014-15 despite a global contraction in trade volume. The Shipping Corporation of India had been making losses continuously for several years and had a loss of ₹ 275 crores in 2013-14. In 2014-15 it earned a profit of ₹ 201 crores a turnaround of nearly ₹ 500 crores in one year. The pace of award of new highway works has increased from 5.2 km per day in 2012-13 and 8.7 km per day in 2013-14 to 23.4 km per day currently. These managerial reforms in the working of the public sector will have large multiplier effects throughout the economy.

Another measure we have taken is to identify what can be called ‘dead money’ and use it productively. The best example is gold. India is well known for its cultural affinity for gold. As economists you will probably understand that this so-called cultural affinity has a strong economic logic. India has often witnessed high inflation. Gold is an excellent hedge against inflation and is a highly portable store of value. Its portability and usability, also make it a source of empowerment of women who traditionally are the main owners of gold jewellery. However, this micro-economic virtue, can become a macro-economic vice. It implies a high level of gold imports. We have just launched a series of gold-related schemes. These will provide Indians with the inflation protection of gold along with a modest interest without actually holding it. If the scheme reaches its potential, it will help meet the rational expectations of the public while moderating imports. Surely, this too is an important reform with potential to transform.

Let me now turn to institutional and governance reforms.

For years, the Planning Commission was widely criticised. It was generally seen as a cumbersome centralising force which imposed central will on the states. It is another matter that some of its strongest critics suddenly developed a nostalgic admiration for the institution they had hated till the previous day. After coming to power we created a new institution, the National Institution for Transforming India, or NITI. My vision of NITI is very different from the Planning Commission. It is to be a collaborative forum for ideas and action where States are full partners and where Centre and States meet in a spirit of co-operative federalism. Perhaps some people thought this was merely a slogan. But we already have concrete examples of its transformative power. Let me explain.

As you all know, the 14th Finance Commission recommended that states be given an enhanced share of Central revenues as automatic devolution. Despite some internal advice to the contrary, I decided to accept the recommendation. This has created a need to restructure Centrally Sponsored Schemes. Ever since the First Five Year Plan in 1952, such decisions were taken unilaterally by the Centre. We did something very different. The task of fixing the sharing pattern of Central schemes was entrusted not to a group of Central ministers but to a Sub-Group of Chief Ministers in NITI. And I am delighted to say, that in a fine example of co-operative federalism at its best, the Chief Ministers have unanimously agreed on a set of recommendations. This is despite the fact that this is a very complex issue, and that they come from many different political parties. I received their report, on 27th October. The main recommendation on the sharing pattern was accepted the very same day and written instructions were issued the very next day. On many other issues too, the Chief Ministers are taking the lead in setting the national agenda. By reforming the institution, we have transformed the relationship.

Our work on ‘Make in India’ and ‘Ease of Doing Business’ is of course well known. Our push to ‘Make in India’ must be viewed in the context of the very slow growth in world trade. The growth rate of trade exceeded GDP growth from 1983 to 2008. Since then, trade has been growing more slowly than GDP. Therefore, producing for domestic consumption is important for growth.

You are all probably aware, that India has substantially improved its ranking in the World Bank’s Doing Business survey. But a new feature, is the very healthy and constructive competition among states. You would be surprised to know, that among the top few states are Jharkhand, Chattisgarh and Odisha. This is an example of constructive competitive federalism.

In a break with over sixty-five years of tradition we have involved states even in foreign policy. The Ministry of External Affairs has been asked to work with the States. When I visited China, a state-to-state summit was also held. And states have been asked to create export promotion councils. Making the States think globally is yet another reform with potential to transform.

I firmly believe that India’s people are far more mature and far more public-spirited than arm-chair critics and experts give them credit for. An important governance issue is the mutual trust between citizens and the state. We made a beginning in trusting the citizens by abolishing many requirements for ‘attestation’ of signatures. For example, the Department of Higher Education, has permitted self attestation by students of documents used for admission in various academic courses. We also ended the requirement to visit government offices for life certification for pensioners by introducing online biometric identification. Economists have traditionally believed that people act in their self interest. But India has a long tradition of voluntarism. We introduced the Give-it-up Campaign seeking the cooperation of the public in voluntarily giving up cooking gas subsidies. We promised them that for every connection given up one poor family currently without gas would be given a connection. This will enable us to liberate many poor women from the health hazards of using firewood including respiratory illness. The response has been tremendous. Within a few months over four million Indians have given up their cooking gas subsidies. Most of them are not rich households and belong to the lower middle class. If any of you in this room still have a subsidised connection let me appeal to you to join them.

This brings me to an achievement that I think even our worst critics do not dispute. This is the change in levels of corruption. For many years, economists and other experts have held corruption to be one of the main constraints on the growth of any developing economy. We have taken decisive steps to curb corruption. I have already referred to what has been done in public sector banks. Another major reform is well known. This is the removal of discretion in allocation of key resources. Our auctions of coal spectrum and FM radio licences have produced major additional revenues. In the case of coal the major beneficiaries are some of India’s poorest states, who will now have much more resources for development. Interviews for lower level government jobs have widely been seen, as a source of corruption. We have recently abolished the system of interviews for lower level posts in government. We will rely on transparent written examination results to decide who will be selected. Our campaign against tax evasion and money laundering is also well known. ₹ 6500 crores has been assessed before the new Black Money Act was implemented. Additionally, over ₹ 4000 crores has been declared under the new Act. Thus over ₹ 10,500 crores of black money from abroad has been detected and assessed. If we can sustain this improvement in integrity and transparency what can be a more transformative reform?

We are also taking several steps to serve the honest taxpayer better. Electronic filing of returns now covers 85% of all tax returns. Earlier, electronic returns had to be followed by a paper verification which used to take weeks to be processed. This year, we have introduced e-verification using Aadhaar and over four million taxpayers made use of this facility. For them, the entire process was simple, electronic and completed instantly with no paper at all. This year, 91% of electronic returns were processed within ninety days as compared to 46% last year. Nearly 90% of refunds were issued within 90 days. I have asked the Income Tax Department to move to a system where not only returns but also scrutiny is done without having to go to the office. Queries could be raised and answered online or by Email. There should be a visible electronic trail of what is pending with whom, where, and for how long. This is being piloted in five big cities. I have also instructed that the performance appraisal system, for Income Tax Officers be changed. The appraisal should reflect, whether or not the officer’s orders and assessments have been upheld on appeal. This will deter corruption and also motivate officers to pass correct orders. When fully implemented, these changes, namely online scrutiny, and changes in performance appraisal have transformative potential.

This is a distinguished gathering. You have many interesting and thought provoking sessions ahead. My appeal to all of you, is to think beyond conventional remedies. We should not limit our idea of reforms to a few standard notions. Our idea of reforms should be inclusive and broad-based. The goal of reforms is not better headlines in the pink papers, but better lives for our people. I am sure you with your knowledge will come up with even better ideas. I look forward to hearing from you of more ‘reforms to transform’ which will make life better for the whole of India. Then not only we in India but the whole world will benefit.

Thank you.