Prime Minister of India - Dr. Manmohan Singh

PM's address at the Economic Times Awards Ceremony

"This function, originally scheduled for November had to be postponed because of the terrorist attack on Mumbai in that month. Although I visited the city along with Congress President Smt. Sonia Gandhi, immediately after that event, I had no opportunity to speak in public on that occasion. I would, therefore, like to use this opportunity to say a few words on that painful subject.

Although that horrific event is behind us, the scars it has left remain. I was a resident of Mumbai for three happy years and I feel keenly the pain and anger of the city. To the people of Mumbai, I can only say that we will spare no effort to ensure that their city does not suffer any such attack in the future.

My heart goes out to the families of those who lost their lives and also those who suffered injuries. I particularly wish to salute the bravery and sacrifice of the men of the Mumbai police and the NSG who laid down their lives fighting against this attack.

Before I proceed further, I would request you to rise and observe one minute of silence as a mark of respect to the victims of the tragedy

The choice of Mumbai as the target of this barbaric attack was not without deeper intent. It was meant to be an attack on our very nationhood. Mumbai is the best-known symbol of free, pluralistic, dynamic and cosmopolitan India. That is precisely why the terrorists chose to attack it.

But the terrorists should know that the civilized world is against them. They must know that this onslaught on the founding ideals of India and on its secular, pluralistic and vibrant democracy is an onslaught on all civilized nations. They must know that this is something that no country can or will tolerate.

We have shared the evidence that we have gathered so far on the incidents with Pakistan and others. Pakistan has admitted that the arrested terrorist is their national. We expect Pakistan to take all the consequent next steps against all those who have planned, organized and executed these horrific crimes.

The Pakistani government has announced that the results of their investigations will be made public in a few days. I urge the Pakistani authorities to come out with a full and complete disclosure of all the facts surrounding the case, without attempts at denial, diversion or obfuscation.

Pakistan should act against the LeT and other terrorist groups and their sponsors - in its own interest, in the discharge of its obligations under international instruments, and to honour the bilateral commitments it has given us at the highest level. It should ensure that nothing like Mumbai, or the attack on our Embassy in Kabul ever happens again.

Apart from hundreds of innocent Indians, innocent civilians from 21 countries were either killed or injured in the attacks. We expect the international community to use its full weight to see that the investigations are pursued vigorously and brought to a speedy and logical conclusion and that terror groups operating from Pakistan are completely shut down. If Pakistan is sincere in its words, it should show through its actions that it will not tolerate these assaults on civilized norms of behaviour.

However, at the end of the day I recognize that this is a problem that we will have to tackle ourselves, with our own sources and our own determination. We need to strengthen our own ability to deal with such attacks and our intelligence capability to anticipate them. The Mumbai attacks revealed deficiencies in our systems that we are working to remedy. After the attacks, we have taken a number of steps to strengthen our ability to fight with terrorism. We have tightened our laws to deal with terrorist crimes. We have established a National Investigating Agency, which is primarily intended to coordinate investigations into terrorist offences. The flow of information from various agencies and the processing of such information for action has been improved. We have finalized details of a coastal defence system in which the Navy would play a key role while the coastal command would directly function under the Coast Guard. Steps to improve our intelligence gathering capability, including the use of more sophisticated technology, have also been initiated.

Let me now turn to the agenda of this meeting.

I would like to offer my sincere congratulations to all those receiving awards today. These awards recognize the superior performance of the recipients as individuals and companies in different fields. They, and the teams working with them which made their achievement possible, fully deserve our applause and accolades. We hope that their performance will be a beacon to others to emulate their achievements and perhaps even exceed them.

And yet, I must also point out that superior economic performance will not be easy in the year ahead. The global economic horizon is cloudier than it has been for a long time. It will be a testing time for the economy and for individual businesses in all sectors.

Before the year 2008-09 began, we knew that it was going to be a year of cyclical downturn in the industrialised world. We did not know at that time that the financial difficulties in the sub-prime mortgage lending sector in the US, which had already surfaced in 2007, would quickly snowball into a truly global financial crisis and that in turn, would lead to a severe recession which has been described by many as the worst crisis since the Great Depression of the 1930s.

The US, Europe and Japan are currently in recession and are expected to show negative growth for the year 2009 as a whole. Global financial markets remain clogged with very high levels of risk perception. Capital flows to emerging markets have been choked.

A global crisis of this magnitude was bound to affect India and it has. Export demand has contracted. The stock market has come down sharply, as it has all over the world, posing severe financing difficulties, in addition to the hardship caused to individual stock holders. Traditional sources of finance have dried up.

The governments of the industrialised world are well aware of the seriousness of the crisis and are taking an unprecedented series of proactive steps to counter the recession. Our government has also taken a number of steps to counter the global downturn. We have relaxed monetary policy in a series of steps since October 2008. We are encouraging the banks, especially the public sector banks, to lend more freely to help otherwise viable production units to cope with the temporary stress of the economic downturn. Steps have also been taken to allow a greater flow of credit to the non bank finance companies which have become an important part of our financial system.

Special efforts have been made to expand credit to small and medium industry and to sectors such as housing and automobiles which are especially hit.

These steps in monetary and credit policy have been supplemented by measures to ease restrictions on commercial borrowing abroad.

We have also taken major steps in fiscal policy to give a stimulus to the economy. Tax rates have been reduced in a number of areas. Budgetary provisions made for expenditure in a number of schemes in the current fiscal year have been substantially increased. These increases are largely for the development of much needed infrastructure in rural and urban areas.

Infrastructure development through Public Private Partnership based on competitive bidding has been an important part of our strategy. However, these projects will now face a difficult financing environment. To deal with this problem, a new mechanism for providing refinancing through the India Infrastructure Financing Company Ltd. has been announced. IIFCL will provide low cost refinancing to banks against long term loans provided by the banks for competitively bid infrastructure projects.

Exporters are another group that are directly impacted by the global downturn. We have paid special attention to their needs. Various export incentive schemes have been strengthened and export credit facilities have been enhanced.

The range of steps taken within a few weeks is unprecedented. Nevertheless, I recognise that they do not take care of all problems. This is because domestic policy action cannot completely negate the effect of a global downturn as severe as the one we face today. We can at best minimise its negative impact. There will be a full recovery to our normal economic potential, but this will take place when the global economy reaches normalcy.

Meanwhile, growth in the current year will be lower than last year. GDP grew by 7.7% in the first half of 2008-09. It will be much lower in the second half of the year. The latest estimates for the final outcome in 2008-09 vary between 6.5 and 7 percent. The exact figure is not critical. The important point is that although growth is lower it is still much higher than most other countries. Furthermore our agricultural sector is doing well. The brunt of the recession is being felt in the areas which had seen rapid growth earlier. This imposes pain, but hopefully these sectors are more able to cope with temporary difficulties.

I must also emphasise that our problems will not be over in the current year. The difficult period will continue into 2009-10. The Government will plan on continuing its efforts for a supporting environment next year also. Both monetary and fiscal policy will have to be tailored to that objective.

Fortunately, the rate of inflation has eased considerably. Inflation is now 5.2% and is expected to decline further. This gives ample flexibility for monetary policy.

On the fiscal side, our space is limited. The fiscal deficit in the current fiscal year will be much higher than originally planned. This is not something to be tolerated indefinitely. However, we will have to tolerate a high fiscal deficit for the next year to accommodate expenditure needed to stimulate the economy. This expenditure should be mainly in infrastructure development and in schemes that help support incomes of the poor.

Our business leaders in both the corporate and smaller sectors will have to cope with difficult and changing market circumstances. I am sure that they will respond to the challenge. Crises are also opportunities to reposition oneself, overcome weaknesses and be ready to resume growth as the world turns upward. The award winners of next few years will be those that have coped best with these difficult times.

Finally, let me comment on the very recent and shocking developments relating to one of the well known firms in the IT sector. The Satyam episode is a blot on our corporate image. It indicates how fraud and malfeasance in one company can inflict suffering on many and can also tarnish India's image more broadly. The Government is determined to unravel the full nature of the fraud and to punish those involved under the due process of law.

I would also urge Indian corporate leaders, many of whom are assembled here, to look closely into their operations to ensure that their systems are fully operational and fraudulent activity is as effectively prevented as is humanly possible.

Corporate leaders and managements hold positions of trust for shareholders, workers, and other stake holders. Their actions have reputational impact much beyond the reputation of their companies. I seek your support in setting the highest standards for Indian industry so that the world can say that we emerged from the Satyam scandal stronger and more credible.

I have no doubt we can do it.

Let me end by once again congratulating the award winners and wishing all of you all the very best."