India has made remarkable progress during the past 60 years and is viewed today as a land of opportunities. Perhaps for the first time since Independence, we are at such an exciting stage of development. This is largely a result of economic empowerment consequent to the transition to a high-growth phase. After growing at an annual average rate of 3.5 per cent from 1950 to 1980, our economy recorded an annual average growth rate of 6 per cent during the 1980s and 1990s, which further increased to 8.6 per cent between fiscal years 2004 and 2007. In the past two fiscal years, we have grown at 9.0 per cent and 9.4 per cent, respectively. More importantly, the current growth phase is based on sound fundamentals and is likely to be sustained.

The most important feature of our economic development is the emergence of knowledge capital as the key growth driver. It is important to understand that this is a new economic reality, which draws its sustenance from the power and momentum our people provide. This people-driven growth model has resulted in rising household incomes and has stimulated growth in consumer demand, which, in turn, has provided the impetus to industrial production. With the knowledge economy demonstrating sustained growth and the realty sector doing equally well, we are not just competing globally, but are also going out and acquiring companies abroad. Today, the mantra is ‘seek beyond your borders’, where one has competitive advantage.

A parallel trend is the growing number of international companies choosing India as a global manufacturing and sourcing hub. They have clearly seen India’s advantages as a manufacturing base. While these growth engines are still at a nascent stage, these are not the only sectors that will provide the growth momentum going forward. We have another area of huge opportunity — rural India. Rural India has a population of about 700 million, spread across 600,000 villages. The ability to do business in rural India is improving dramatically. Villages that were hitherto unconnected are getting connected through the shifts in technology. This paradigm shift in technology will drive the next transformation and give us the next engine of growth.

While the momentum is without question, there is a need to continuously plan ahead for the resources needed to support this growth. For example, growth in the services sector has brought along with it the demand for skilled and qualified manpower. The issue here is no longer finding jobs for people, but ensuring that there are enough people with relevant skills for the jobs at hand. The other key challenge we face is the lack of infrastructure. Power, airports and ports, urban rejuvenation and rural infrastructure are areas where the current facilities are inadequate to support the growth targets we have set for ourselves.

We must be ready with solutions to these challenges. These include public-private partnerships to help build infrastructure, expanded access to primary, secondary and higher education, and re-orientation of curricula to meet the needs of the knowledge economy. While we may not have transformational one-shot reform in these areas, calibrated initiatives must be undertaken to address these issues. We must also encourage each region of the country to map its strengths and opportunities, and leverage these for growth and increase the regional per capita income. This will ensure that India sustains high growth rates over a long period, with the benefits of growth spreading across a greater proportion of our people.

What we are witnessing today is a new era of growth in India. The entrepreneurial talent and innovative capabilities of our people have come to the fore, and are opening up new vistas for the future. Robust investment inflows are providing the financial capital to transform these visions into reality. This growth is happening against the backdrop of a vibrant democracy and a sound institutional framework. We must continue to back this up with a supportive policy environment and careful management of our physical resources to ensure sustained growth and prosperity.