Udupi,
May 26: Union finance minister and
Congress leader Pranab Mukherjee visited Manipal to participate in a seminar
and to inaugurate the academic block at Manipal Institute of Technology,
Manipal, here on Saturday May 26.
He
inaugurated the academic block of MIT at 3.30 pm.
He then
participated in a national seminar on "21st Century as the Asian Century:
Role of India and China" organized by Manipal Centre for Asian Studies at
Fortune Inn Valley View.
Dr
Arvind Kumar, professor and head of Manipal Centre for Asian studies was the
convener of the seminar. Manipal University chancellor Ramdas Pai was also
present.
Pranab
Mukherjee's address at the national seminar:
"It
gives me great pleasure to be here at the inaugural of this national Seminar
organized by the Manipal Centre for Asian Studies. We are only 12 years into
the new century and yet, the changes, social, cultural and of course, economic
that we are witnessing worldwide are significant, rapid, awe inspiring and
sometimes even dislocated. In that context, to infer how the 21st century would
unfold for Asia is not going to be easy. Yet, I would like to emphasize with
some determination and hope that the 21st century could well be shaped by Asia.
I
cannot say whether we are destined to make this an Asian Century, but I am sure
that we have to strive for such an outcome. I am fully aware that challenges
that we face to fulfil such a vision are not exclusively economic, but I intend
to briefly share some thoughts relevant to this discussion, primarily focusing
on economic factors.
Asia
embodies immense social, cultural and economic heterogeneity. Yet many Asian
economies share a common pattern of historical evolution and economic
development. In this vastly populous continent, we also find economies that are
at various stages of maturity. At one end of the spectrum are economies like
Japan that have experience sustained economic prosperity and now find
themselves in a phase of relatively sluggish economic growth. At the other end
are economies like China and India that are experiencing rapid growth even as
the world is gripped with uncertainty and highly volatile markets. Apart from
the so-called newly industrialized Asian Economies like South Korea, Hong Kong,
Taiwan and Singapore that have done well over the past few decades, economies
in South East Asia, most prominently, Indonesia, are on their way to catching
up with major emerging economies. China has already overtaken Japan as the
world’s second largest economy.
This
transformation in Asia must be understood in the context of shifts taking place
in the world economy. As we are all aware, following a staggered recovery from
the economic crisis of 2008, widespread economic problems have surfaced in
Europe, presenting a further setback to the global economy. The sovereign debt
crisis in the Euro Zone has deepened without a decisive resolution in sight. In
this context, the growth performance of Asian economies in the short to
medium-term is crucial not only to keep the ‘engine’ of global growth running
by also to haste recovery from the present global slump.
The
current situation presents some unique opportunities. A crisis of the magnitude
that we are witnessing compels us to take notice of our deficiencies, suitably
reorient policies and redefine priorities. While economic challenges faced by each
Asian country are unique and there is no one-size-fits-all future trajectory of
economic development, there is worldwide recognition of the fact that most
Asian economies, including India are poised to attain sustained long-term
growth, notwithstanding some short-term policy challenges.
Timely
policy interventions helped most of the Asian economies, including India, to
recover quickly from the 2008-09 global crises. In 2012, as per IMF estimates,
Asia’s real GDP growth of around 8.2 per cent outpaced growth in other regions
of the world with China and India being in the forefront. The Indian economy,
in particular, recovered with an average growth of 8.4 per cent in the two
years flowing the crisis in 2008-09. Since then, factors including monetary and
fiscal policy tightening, uncertainties in capital flows and slowdown in
external demand have impacted the growth performances of these economies to
varying degrees. India’s growth in 2011-12 is estimated to have slowed to 6.9
per cent. With heightened uncertainty in the Euro Zone, the short term concern,
at present is regarding reversal in FII flows leading to increased currency
volatility in several Asian economies. We in India are witnessing unprecedented
depreciation of the rupee vis-à-vis the US dollar with the current account
deficit widening to around 4 per cent of GDP. Even in such a scenario, which is
being addressed via a slew of policy measure, the IMF expects growth in Asia
and Pacific region to gain momentum in 2012, with growth projected at 6 per
cent in 2012 and 6.5 per cent in 2013.
With a
reasonably quick recovery, emerging economies in Asia are generally better
placed vis-à-vis other emerging economies to withstand the fresh round of
global economic turmoil. In the long term, a key advantage that Asian
economies, prominently India and China, possess is high rates of saving and
investment. Large size of the domestic market coupled with mechanisms to
harness potential demographic dividends can lend robustness to the Asian growth
story. India’s resilience, in particular, results from the fact that the bulk
of India’s GDP is driven by domestic demand. A calibrated approach to capital
account convertibility by India has. To a significant extent, prevented surge
and reversal of debt creating capital flows. India’s banking sector is robust
and export basket is increasingly getting diversified with developing countries
being our largest export market. Our evolving financial sector robustness in
the economy. These policy measures by India are slowly gaining recognition as
best practices, in Asia and elsewhere, worthy of emulation in a post-crisis
world. China’s policy too has started emphasizing a growth strategy that is
more dependent on domestic demand.
Asian
economies, in general have evolved to be attractive destinations for Foreign
Direct Investment (FDI) which is aiding innovation in these economies. As per
the Global Innovation Index 2011 (published by INSEAD and the World
Intellectual Property Organization ( WIPO ) several Asian economies including
Singapore, Hong Kong, Korea, Japan and China count among the world’s leading
innovators. Many of these economies are not just successful growth stories but
also examples of successful public policy experiments that achieved growth via
export orientation, macroeconomic stability and innovative
institution-building. It attracted investment, which in turn propelled them up
the manufacturing value chain. Needless to say, we all need to keep drawing
appropriate lessons from these economies while they need to sustain their
achievements to perform even better in the course of the ‘ Asian century’.
There
are however several challenges that we face. A major one is to devise ways in
which the fruits of high growth can benefit the poorest of the poor. Poverty
and inequality, with their associated ills continue to be single most common
challenge. Going forward, GDP growth in many developing nations must be
accompanied by measures aimed at fulfilling the aspirations of a young
population just as social security compulsions would assume prominence in aging
societies. We need to ensure adequate investment and utilization of funds in
sectors like health, education and skill-development that are crucial for human
capital build-up. We must also create employment opportunities so that there is
a broad-based stake created in the growth process. Successful models of
financial inclusion need to be replicated to address the economic well-being of
the disadvantaged. Most importantly, governance structures in Asia need to evolve
to address these requirements.
Resolution
of long-standing politics conflicts, managing urbanization, addressing climate
change issues and containing adverse effects of a rapidly deteriorating natural
environment that is facing pressure from burgeoning populations are some of the
other emerging challenges that confront many of us in Asia. Lack of
infrastructure and dearth of resources to finance large-scale infrastructure
initiatives stand in the way of achieving inclusive growth in many economies including
India. Energy needs that are sure to grow as the benefits of growth get further
dispersed are a major concern. Investment in renewable energies as well as in
technologies that make such sources of energy cost-effective must therefore
gain pace.
I must
stress that collaborative efforts are a must to tackle these issues that result
in strengthening of cross-country institutions and delivery mechanisms within
countries where these are needed the most. While recent efforts like setting up
of an ASEAN infrastructure fund would surely address some of the problems
outlined above, Asian economies need to collectively think on channels of
engagement with each other that create synergies directed at addressing common
challenges. We must appreciate that to gain in unison, we need to act in
unison. Even in existing multilateral for a including the G-20 and IMF we
should aim to coordinate more in areas where there is significant collective
gain to be achieved.
Finally
I would like to underscore that the existing divide between advanced and
developing Asia must be bridged to make the 21st century an Asian century. To
this end, while advanced Asia must maintain its economic ‘miracle’, an
environment must be created for the rest to catch-up and prosper. Ultimately it
would depend on how individual Asian economies manage their ‘rise’
strategically in order to co-exist and co-prosper."
Sheeja
Moodubelle
Daijiworld
Media Network - Udupi
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