Press Information Bureau

Government of India

Ministry of Finance

04-May-2011 17:08 IST

Emphasizing the need for regional cooperation for development, Finance Minister, Shri Pranab Mukherjee has said that broad based, inclusive and sustained growth is necessary to make the 21st century, the Asian century a reality. He was addressing the Governors’ Seminar on “ASIA 2050” at the Annual Meeting of Asian Development Bank (ADB) at Hanoi, Vietnam, today. Saying that the fulcrum of economic power is tilting towards Asia, he said that the Asian countries should transform their economies into knowledge and skill-based economies over the next 40 years to ensure high sustained growth. He highlighted the need to increase the agricultural productivity by building forward and backward linkages, efficient credit delivery, water management, improved farming practices and rural infrastructure. Finance Minister, Shri Mukherjee said that we will need to invest much more in human resource development through higher investments in education and health so that Asia can lead in technology, innovations and be at the forefront of the knowledge curve. All Asian countries need to work towards improving governance, transforming their institutions into high quality, modern institutions and apply transparency and accountability filters to domestic policy making and implementation, added Shri Mukherjee.

Following is the text of the Speech of Finance Minister, Shri Pranab Mukherjee delivered today at the Governors’ Seminar on “ASIA 2050” in Hanoi, Vietnam:

“I would like to congratulate the ADB for its timely study on ASIA 2050. Asia has experienced high economic growth over the past few decades, and emerged as the lynchpin of the global recovery. With Asia firmly leading the global economy out of the morass of the crisis, the fulcrum of economic power is surely tilting towards Asia. The study rightly points out that despite its blistering pace of growth, Asia is not on the autopilot mode and in fact would require careful steering to realize the goal of a prosperous Asia which will not only make lives of Asians better but augur well for world economic growth.

Permit me to present some views on what needs to be done to make the Asian century a reality.

First and foremost, I believe that if Asia has to reach the level of an affluent region, achieving broad-based, inclusive and sustained growth would be a paramount necessity. Inclusive growth is critical for a sustained assault on poverty and for containing inequality. If we fail to achieve inclusive growth, we will end up with islands of prosperity within a largely poor Asia. Equally, important is the quality of growth. Asian countries should aim to transform their economies into knowledge- and skill-based economies over the next 40 years to ensure high sustained growth.

The second point is meeting the challenge of the region’s food and energy needs. Over the next four decades, as Asia grows, its demographic foot print will be much larger. Asia with an estimated population of 5.1 billion would account for 56 per cent of the world population and 65 per cent of the population of the developing world in 2050. Even today there are 1 billion people, majority of them Asians, who live below the poverty line and face chronic undernourishment. Lifting them out of poverty and feeding the extra mouths will require increasing cereal production by over 70 per cent. Moreover, with increase in prosperity and changing consumption pattern, the demand for food will increase. We need to step up the pace of agriculture growth and achieve improvements in agriculture productivity by building forward and backward linkages, efficient credit delivery, water management, improved farming practices and rural infrastructure. Similarly, meeting the energy needs of the region will be a major challenge. Asia would have to ensure energy security by utilizing all available sources of energy including fossil fuels and renewable resources in an efficient and sustainable manner, while carefully managing climate-change issues.

The third point I would like to make pertains to the demographic dividend. It is felt that in developing countries in Asia, a key economic force is their young working population, which will contribute to higher growth. While this argument is sound in itself, what needs to be emphasized is the quality of this workforce that we are producing. We will need to invest much more in human resource development through higher investments in education and health. Furthermore, Asia would have to take leadership in technology, innovations and be at the forefront of the knowledge curve and this will be possible only is its human resources is highly skilled.

Managing urbanization and overcoming infrastructure constraints is the fourth area I would like to touch. Between now and 2050, Asian urban landscape will be transformed as its urban population is slated to double from 1.6 billion to 3.1 billion. Many of Asia’s cities today are already bursting at the seams and face ever increasing infrastructure deficit. If the Asian mega cities and secondary cities are to serve as growth centres, attracting investments in economic activity, huge investments in urban infrastructure and improved and efficient service delivery through innovative modalities involving public and private sectors would have to be ensured.

Fifth, regional cooperation has to become a major development agenda as it has the potential to create synergies between the fast growing major economies and the neighbouring economies and push the region into a higher growth orbit. As the Asian economies try to rebalance growth towards internal demand, regional cooperation and integration through transport and energy connectivity could pave the way for the emergence of a vibrant regional market. We have seen that improved trade and investment ties and regional integration of production has been critical to Asia's leadership in global manufacturing. However more needs to be done to strengthen these ties. Addressing structural bottlenecks by strengthening cross border infrastructure linkages in transport, communications and energy sectors would help in addressing structural bottlenecks that are impeding growth. Similarly, integrating financial markets and channelising investments in the region would be critical to growth. In short, we read to need to work towards a broader more inclusive pan Asian regional community.

Lastly, for the growth story of Asia to unfold an enabling environment and appropriate institutional structure is a pre requisite. When we talk about governance, it is not just corruption but also accountability and predictability. All countries need to work towards improving governance, transforming their institutions into high quality, modern institutions and apply transparency and accountability filters to domestic policy making and implementation.

To recapitulate, for 21st century to truly belong to Asia, the Asian growth story would have to be based on inclusivity, making full use of its human and natural resources, overcoming resource and infrastructure constraints and fully utilizing the potential of the region through fuller cooperation.”

DSM/BY/GN

Inclusive growth is essential to make the Asian century a reality, demanding skills investment, infrastructure and cooperation. Asia's prosperity strategy emphasises inclusive growth, transformation to knowledge- and skill-based economies through greater investment in education and health, and enhanced agricultural productivity and energy security via improved farming practices, linkages, credit delivery and sustainable energy use. It calls for major investments in urban and cross-border infrastructure, innovative public-private service delivery, deeper trade and financial integration, and institutional reforms to ensure predictability, transparency and accountability in policymaking and implementation.