At the outset, I wish to congratulate His Excellency the Prime Minister of Bhutan Lyonchhen Jigmi Thinley for his unanimous election as Chairperson of the South Asian Association for Regional Cooperation. I assure him of India's fullest support.

I also take this opportunity to convey our deepest appreciation to His Majesty Jigme Khesar Namgyel Wangchuck and the Royal Government of Bhutan for the excellent arrangements made for this Summit.

It is a singular pleasure for me to visit Bhutan once again and to experience its pristine beauty and the warmth of its people.

I wish to welcome the two new Observer countries, Australia and Myanmar, to the SAARC fraternity.

This is to be an historic Summit. This year we mark the twenty-fifth anniversary of our organization. This is also the first time that we meet in the beautiful country of Bhutan.

In the last few years Bhutan has witnessed momentous changes, and I take this opportunity to wish its people even greater prosperity, peace and progress.

Speaking at the first SAARC Summit in Dhaka in 1985, Prime Minister Rajiv Gandhi described the establishment of SAARC as an act of faith. Based on our experience so far we can affirm that this was also an act of great foresight and statesmanship.

In these two and a half decades our sub-continent has been witness to much progress. Yet, each one of our countries, and our region as a whole, has a long way to go in fulfilling the aspirations of our people.

In looking back at these two and a half decades we can claim the glass is half full, and compliment ourselves, or, we can admit the glass is half empty and challenge ourselves.

I believe we should challenge ourselves by acknowledging that the glass of regional cooperation, regional development and regional integration is half empty. Intra-regional trade flows have grown and transport and telecommunication links have expanded. Yet, the share of intra-regional trade and investment flows in total trade and investment flows in South Asia is far below what we see in East and South-east Asia. It is also well below the potential.

We have created institutions for regional cooperation, but we have not yet empowered them adequately to enable them to be more pro-active.

We have opened new windows of cooperation. The SAARC Development Fund, the Food Bank, the South Asian Free Trade Agreement and the South Asian University are examples of new institutions that will knit our region more closely together.

The challenge before us is to translate institutions into activities, conventions into programmes, official statements into popular sentiments. Declarations at summits and official level meetings do not amount to regional cooperation or integration. Regional cooperation should enable freer movement of people, of goods, of services and of ideas. It should help us re-discover our shared heritage and build our common future.

We must ask ourselves what kind of South Asia we wish to create for our present and future generations? At this anniversary Summit we should renew our compact to build a region that is better connected, better empowered, better fed and better educated.

By rising to this challenge we will not only help ourselves but also become a net contributor to global economic and social prosperity. We can once again become part of global trading routes and networks. We can influence the global discourse on issues of concern to us. If we do not, we run the risk of being marginalized and suffering from stagnation.

We are able to cooperate individually as members in various international fora. But it is unfortunate that, together, the people of South Asia do not have the voice they should and could have in the global polity. The 21st century cannot be an Asian century unless South Asia marches ahead and marches ahead together.

There is perhaps no region more vulnerable to the effects of climate change than ours. Bhutan has led by example in combining development with conservation of the environment. It is therefore most appropriate that our Summit focuses on this important issue.

Regional cooperation can be a significant multiplier in improving the quality of governance in managing our natural resources, in preventing land and water degradation and in strengthening our food, water and energy security.

We welcome the conclusion of the SAARC Convention on Cooperation on Environment. I am happy to announce the setting up of an 'India Endowment for Climate Change in South Asia' to help Member States in meeting urgent adaptation and capacity building needs. I would also propose the setting up of Climate Innovation Centres in South Asia to develop sustainable energy technologies based on indigenous resource endowments.

India has recently launched a National Mission on Sustaining the Himalayan Ecosystem. The National Institute of Himalayan Glaciology under development at Dehradun in India could serve as a nucleus for regional cooperation in this vital area.

I have a vision of inclusive growth in South Asia both within our countries and for the region of South Asia as a whole. Regional and sub-regional imbalances in growth affect all of us in varying degrees, and have led to social unrest.

This will require much greater attention in the future, with an emphasis on development at the grassroots level. We will have to institute the right policies in the areas of agriculture, forestry, appropriate technologies and disaster management.

South Asia is emerging as the hub of technological innovation. The manner in which we are able to harness technology for development will be crucial. Initiatives such as tele-medicine and tele-education are already having a profound effect on our societies. There is much that we can do together and learn from one another in all these areas.

Health and human resource development are perhaps the most compelling of the areas that impact on the dignity and wellbeing of our people. We need to bring on the agenda issues relating to basic education, skill development, the creation of a scientific temper among youth, women's empowerment and improving the quality of nutrition.

I am happy that we are ready to begin the first academic session of the South Asian University in August 2010. India will provide 50 'SAARC Silver Jubilee Scholarships' for meritorious students from SAARC LDC countries for the South Asian University.

Mutual respect and tolerance are part of our civilisational heritage. So is the abhorrence of extremism, radicalism and terrorism. Let us pledge to revive the South Asia of our dreams that is once again a source of new ideas, new knowledge and new opportunities.

Let us make SAARC a dynamic organization that can realize this collective vision for all our people.

I thank you for your attention.