Need for inclusive growth vibrates at CII Partnership Summit

The critical need for inclusive growth not only in India but the rest of Asia, was articulated in a significant way , at the highly successful Confederation of Indian Industry (CII) Partnership Summit recently in Gurgaon, at which a top Lankan delegation was present as well.

India’s influential and highly respected Finance Minister P. Chidambaram, as well as Commerce Minister Kamal Nath, shared their own insights on the need for inclusive growth.

Poverty reduction
In one of the sessions, Mr. Chidambaram asserted that growth is undoubtedly the most important indicator of development. “Without growth, there is no chance of lifting people out of poverty,” he said quoting some of India’s own success. It was pointed out that supporting sustainable growth was every government’s responsibility.

“Poverty cannot be described as just the absence of income. Equally important are characteristics such as lack of education and healthcare, skills for getting high value employment, no ownership of assets and no access to capital,” the Finance Minister said.

He said that the social well being of the people was better evaluated by human development indicators such as infant mortality, maternal mortality, literacy, life expectancy at birth and per capita expenditure on health and education.

The UNDP’s Human Development Report has popularised this approach to development. Dr. Amartya Sen’s work in this area, characterising development as an endogenous process, has also gained popularity. “It is true that there is no one-to-one correlation between high income and a good quality life. Equally, there is no trade-off between economic growth and positive social outcomes,” he said.Commerce Minister Nath during his address at several sessions also stressed the need for trade negotiations to be inclusive which could only be achieved if such talks are fair.

Trade negotiations
Speaking at the session “How can Trade negotiations ensure Inclusive Growth?” at the Partnership Summit 2008, Mr. Nath said the Uruguay Round saw the participation of large number of countries in global trade negotiations for the first time. Understanding of the dynamics of international trade negotiations in the past , was extremely limited among most countries, because of the lack of the technical inputs, civil society groups etc., he said. The global economic architecture has undergone a great change over last ten years. Technology played an important role in this transformation. He said advancement of technology has led to shifting of US jobs to countries like India. Companies are finding outsourcing and off-shoring profitable as it reduces their costs. Emerging economies like India, China, and Brazil are the ‘new engines of growth’ of the world economy that can insulate the global economy from crises.

“Issues faced by different countries and their interests are not similar. Therefore we cannot have a common approach to trade liberalisation. There can be no ‘one size fits all’ solution,” India’s Commerce Minister said.

According to him agriculture was holding up the Doha Negotiations because the commodity exporting countries are the most vulnerable economies.

“The need of the hour is correcting the structural flaws in agricultural trade. We need to have a fair trade in order to have free trade and this is inclusiveness,” Mr Nath emphasised.

He disclosed certain flaws including the fact that 42% of the US cotton price is subsidy given by the US government to its mostly rich farmers. African cotton farmers who are mainly small and marginal cannot be expected to compete with US cotton in the world market. He noted that OECD countries spent US$ 1 billion per day as subsidies for farmers. “Such distorting trade subsidies cannot ensure fair trade and negotiations,” he added.

He said that time has come for the developed world to ensure healthy economies in developing countries as part of the WTO agenda.

Sri Lanka Sharing some insights from Sri Lanka at this session was Minster of International Trade and Export Development Prof. G.L. Peiris. He said that lack of inclusivity was a challenge and emphasized there was “an intimate and indispensable connection between inclusivity and sustainability of growth.”

Prof. Peiris told the CII Partnership Summit session chaired by ICICI Bank CEO and Managing Director as well as CII Vice President K.V. Kamath, that the Sri Lankan government was aware of this challenge, and listed some of the initiatives undertaken such as setting up export promotion villages in rural areas, introducing tax incentives for investors to set up economic activities in rural areas. However he noted that incentives alone will not spur growth, and that it was important for developing countries to boost infrastructure as well.

Prof. Peiris also said that it was important for developing nations to use trade as an instrument of social policy, and thereby promote fair trade, healthy competition and inclusive growth than merely focusing on trade facilitation.

Among other speakers were El Salvador’s Vice President Ms Ana Vilma Albanez de Escobar, Vice President of El Salvador, Ethiopia Minister of Trade and Industry Girma Birru and Ontario’s Minister of Economic Development and Trade Ms Sandra Pupatello.

Inclusive growth
Prof Peiris also shared similar sentiments during his address in another session which focused on “Charting Growth: Making it Inclusive.”

At this session at the Summit, it was stressed that equal ‘Access to Opportunities’ was essential for inclusive growth.

Indian Member of Parliament Deepender Singh Hooda said the two important issues that need to be addressed are improving access to education and reducing the number of people dependent on agriculture by enhancing their skills to tap prospects in the services and manufacturing sectors.

Elaborating on the possible contribution of Industry to inclusive growth, Mr Hooda suggested that the industry participate in such skills enhancing initiatives, energy conservation and water conservation measures.

Key issues
The key issues discussed at the session included the importance of growth in poverty alleviation, whether growth by itself is enough and the experience of other countries. Apart from Prof. Peiris, other foreign speakers who shared their ideas included Deputy Prime Minister for Economic Affairs, Syria Abdulla Dardari, South Africa Director Edward Nathan Sonnenbergs, South Africa Robert Lee Applebaum, Abdul Qayyum Khan, Member, Metropolitan Chamber of Commerce and Industry, Dhaka

Summing up the discussions CII’s Chief Mentor and a member of the Board of Sri Lanka’s premier blue chip John Keells Holdings Tarun Das, said that at the session there was consensus that rapid growth is necessary for inclusive development but growth itself might not be enough. Access to infrastructure, both physical and social including education, skills, finance and health care was also necessary, he added.

Technology and innovation
The second Sri Lanka Minister to be invited to be one of the speakers was Investment Promotion and Enterprise Development Minister Dr. Sarath Amunugama.

Speaking at the session titled -”Technology and Innovation-Building Blocks for Development” Dr. Amunugama said that South Asia could be inspired by the “leap-frog” theory, using technology as a means by experts such as Sir Arthur C Clarke who is residing in Sri Lanka.

He said that technology could only thrive in free markets and if private sector is allowed to play its due role. He described the ‘Nano’ referring to Tata’s car for the common man and US$ 100 laptop initiatives were some of the new faces in innovative technology.

India’s Union Minister of Science and Technology and Earth Sciences Kapil Sibal said that innovation should lead to improvement in the living standards of the population.

He said that technology is not about changing prices in response to the changing market behaviour, it was about changing the behaviour of the people which leads to improvement in their living standards. He said that current focus of the corporate sector is on profits, but they should focus more on community development. He cited an example to prove this by saying that less than one percent of total investment by pharmaceutical companies in R&D goes in to developing vaccines for diseases that affect the poor people.

Sustainable wealthMr. Digby Jones, Minister of State for Trade & Investment, UK Trade & Investment, UK said in coming years sustainable wealth can be created in the world by exploiting knowledge. He further added that to survive in the 21st century there is a need for greater investment in innovation. He however said that this could only happen if we can promote innovation. Mr. Karan Bilimoria, UK Chairman, Indo - British Partnership, UK stressed on greater focus on entrepreneurship to make growth more inclusive. He said that today India is able to realise Jawaharlal Nehru’s dream of ending poverty and ignorance by boosting the entrepreneurial spirit in India. Mr. Ajai Chowdhry, Chairman & CEO, HCL Infosystems Limited said that it is only by mass deployment of technology the growth can become inclusive and sustainable. He quoted the e-chaupal initiative of ITC to stress on how technology is changing the lives of millions of people in poor countries. In his concluding remarks chairman Mr. Ashok Soota, Past President, CII & Chairman & Managing Director, Mind Tree Consulting Limited said that technology and innovation can change the lives of the people only when corporate sectors become more socially responsible.

CII Past President and Co-Chairman of the Summit, Sunil Kant Munjal, who is also the Chairman, Hero Corporate Services Ltd, announced the key outcomes of the event.

Key Take Aways
He outlined nine ‘Key Take Aways’ from the summit, which had 146 bilateral and ministerial meetings, 1004 ‘Business meetings’ among the delegates, nine Plenary sessions and 12 Networking Sessions.

The Commerce and Industry Minister announced a contribution of Rs 15 crores for the exhibition and convention centre to be set up in Haryana, he said. Mr Munjal said that India and Singapore will be starting a ‘Strategic dialogue’ to facilitate more business between the two sides. CII is organising ‘India @ 60’ in Singapore this year, and Singapore would build ‘Skills Development Institute’ and an ‘Eco-City’ in India.  He said that India, Indonesia and, India and Australia would be setting up a Joint Study Group (JSG) to study the possibility of Free Trade agreement.

He said CII Task force has been constituted to identify potential areas of business between India and Bhutan. Bhutan is considering allowing Indian firms 100% foreign equity in Hydel Power projects. Mr Rajiv Arora, Chairman, Haryana Industrial and Infrastructure Development Corporation, government of Haryana said that the differentiating factor of the Partnership Summit 2008, has been the huge turnout of participants for the entire duration of the summit. He thanked CII for this and said that Haryana got the opportunity to showcase the scope for investors and policies of the state both from India and abroad.

He said that the Haryana Chief Minister, Mr Bhupinder Singh Hooda interacted with the industry delegates from India and overseas and most importantly with the CII National Executive. He said that Haryana government had organised exhibition of the various departments of the state government, most importantly the power and the tourism sector.

The most positive outcome of the summit he said, is the decision to set up export exhibition and convention centre and look forward to the participation of CII in this regard. Mr Deep Kapuria, Chairman CII Northern region & chairman and Managing Director, Hi-Tech Gears Ltd, said that this forum has been able to discuss issues of multilateral trade negotiations from the perspective of the developing countries and LDCs, which are fast becoming low cost manufacturing centres.

The summit provided informal platform for frank discussions between countries and businesses. The summit provided an ideal forum for business-to-business interaction.‘The Partnership Summit 2008’, was organised jointly by Department of Industrial Policy and Promotion (DIPP), Government of India, Government of Haryana and the Confederation of Indian Industry (CII).

In addition to the two Ministers, a private sector team also attended the Summit. Among them were the Ceylon Chamber of Commerce Chairman Mahen Dayananda, former Chairman Mano Selvanathan, Ceylon Chamber CEO and Secretary General Prema Cooray, Sampath Bank Managing Director Anil Amarasuriya, Chartered accountant T. Someswaran, John Keells Holdings Executive Vice President Krishan Balendra, apart from Board of Investment Deputy Director General Investment Promotion Duminda Ariyaratne, Sri Lanka Conventions Bureau Director General Vipula Wanigasekera and Ceylon Chamber Assistant Secretary General Ayoni Waniganayake.