I wish the Prime Minister had said

Uppermost on your minds is the economy. Today, a leading business newspaper began its editorial with the words “As the Narendra Modi government completes two years in office, the economic recovery that began in the last quarter of 2013 continues to gather momentum…”.

Inherited stable economy

That is correct. The recovery had begun in 2013 under the UPA government. The economy had been stabilised after the volatile years of 2008 to 2012: inflation had begun its steady decline from 11.5 per cent in November 2013 to 6.7 per cent in June 2014, the fiscal deficit had been contained at 4.4 per cent at the end of 2013-14, the current account deficit had been compressed to 1.7 per cent and the foreign exchange reserves stood at a healthy USD 314 billion. Yet, everyone agreed that there were headwinds and the new government faced important challenges.

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Two years after, I am glad to report that we have some achievements to our credit. Helped by unprecedented low oil and commodity prices, we were able to bring down CPI inflation from 6.7 per cent in June 2014 to 5.4 per cent in April 2016. After a half step in 2015-6, which was a mistake, we decided in February 2016 to return to the path of fiscal consolidation, and I assure you that we will reach the target of 3 per cent in 2017-18.

I believe the CSO numbers which said that the UPA government had bequeathed an economy that had grown at 6.9 per cent in 2013-14. The growth rates were 7.2 per cent in 2014-15 and 7.6 per cent (estimated) in 2015-16. Even allowing for some over-statement, the new ‘normal’ for India’s GDP appears to be about 7 per cent. That, however, is not sufficient.

The keys to high growth are fiscal stability, enabling policies and increased investment. And it is high growth that will bring jobs. Among parents and young people, the main concern is jobs. A report, on a survey, published today by a government-friendly newspaper, has listed the expectations of the people. They are creation of jobs; tackling drought and farmers’ woes; and bringing down inflation. Development and economic growth is the demand of the people (56 per cent). By way of contrast, only 10 per cent demand promotion of Hindutva. Even if some in my party or government take a different view, I am determined to heed the voice of the people.

Failed in job creation

To be absolutely candid, we failed to create jobs. We also failed to anticipate and tackle rural distress, especially among farmers and farm labourers. The agriculture sector shrank by -0.2 per cent and grew by 1.1 per cent in the last two years. I am mindful of Dr Ashok Gulati’s admonition today that “the government needs to move fast and deploy bold steps on the agri-front if it wants the farming community to benefit and poverty eliminated”.

Our moderately successful stories are in building roads, power generation and production of fertilisers. We have also achieved significant success in areas where we have taken forward the programmes of the previous government. I know that my party, including me, had rubbished MGNREGA and questioned the legality and utility of Aadhaar. I have no hesitation in admitting that we were wrong. While change is necessary, there is merit in continuing with the well-designed schemes and programmes of the previous government.

Similarly, my government has greatly benefited by the Nirmal Bharat Abhiyan and the National Skill Development Mission launched by the previous government. We have scaled up the two programmes which are now being implemented as Swachh Bharat and Skill India.

Many mountains to climb

However, we have many more mountains to climb. Several growth indicators are worrying. Among them are annual sales of all firms (-5.77 per cent), annual sales of manufacturing firms (-11.15), credit (9.77), merchandise exports (-15.55) and the index of industrial production (2.4). What this means is that while the economy is capable of maintaining its pace, its overall health is not robust. A new ‘normal’ growth rate of 7 per cent will not create jobs, especially for the millions of young people who have no more than 8 or 10 years of school education and no special skills. Our demographic dividend may turn out to be a demographic millstone if we cannot create useful jobs for the approximately one crore people who enter the job market every year.

I have therefore directed the ministries concerned to immediately propose suitable measures to implement the following prescriptions:

* Find finances for infrastructure projects including new financing structures for long term funds and pooling of investments.

* Evolve a policy for manufacturing for export.

* Rebuild all cities with a new model of governance to make them liveable cities.

* Prepare a timetable to implement the recommendations of the Financial Sector Legislative Reforms Commission.

* Above all, I intend to enlist the support of the Opposition parties through discussion and accommodation of their views.

I have dwelt at length on the economy. There are other equally weighty issues. Let me now address those issues….