Welcome Address by ADB President Takehiko Nakao at the “Seminar on Innovation for Inclusion” on 2 May 2013
Honorable Minister Chidambaram; Ms. Kidwai; Mr. Mariwala; distinguished guests, ladies and gentlemen:
Good afternoon. I am pleased to be here in this seminar on innovation and inclusion.
As you may know, I am relatively new to ADB, and I emphasized the importance of private sector development in my vision statement for the election of the President of ADB. Indeed, the private sector has been a key contributor to Asia's economic boom and a powerful tool in the fight against poverty. Of course, there remains considerable untapped potential for drawing on the entrepreneurship, talent and productivity in our region, including among the largest, but poorest, socio-economic groups.
India is expected to continue to benefit from the so called demographic dividend. I am confident that India will lead global growth in coming decades. Everybody sees great potential in India. The “Inclusive Business” model attempts to leverage this potential by integrating the entire population into the business value chain—not only as consumers, but also as suppliers, distributors or employees—in unique and innovative ways. The inclusive business model allows the private sector to contribute even more to poverty reduction. Here today, we have representatives from some of the most successful inclusive businesses in India. I would like to take this opportunity to discuss how to expand the efforts in this direction.
In my view, the Government should address four key issues to ensure that India's growth is sustainable and inclusive.
First is the need to upgrade the service sector. As you know, India already has a large service sector, which has been a major growth source. Considering India's young and growing labor force, the service sector needs to create more jobs for the millions who will join the workforce every year. We all know that India has to reduce burdensome regulations to allow the sector to be more competitive and dynamic. The recent government service sector reform is most welcome.
Second, improvements in the investment climate are vital, especially if India is to realize its potential in manufacturing. India needs to dramatically expand the sources and volume of available infrastructure financing. This will not be possible without private sector participation. Private sector participation in turn requires a business environment that ensures adequate return on investment, transparency in procurement, and excellent governance and regulation.
Third, while India possesses some of the world's best managers, scientists, and engineers, a large portion of its workforce is unskilled or semi skilled.1 In this context, I am happy to see the unfolding of the National Skills Policy. The policy marks a paradigm shift from the traditional government-led model of skill development and vocational training to one which emphasizes private sector-led skills development.
Lastly, there is the challenge of urbanization. Recent flooding in megacities such as Bangkok and Beijing demonstrate that rapid urbanization without proper infrastructure planning can cause severe damage to the economy and human lives. India must learn from their experience and adopt green urban planning early on. The Indian Government's recent promotion of dynamic economic corridors between major urban cities is a step in the right direction.
For our part, ADB is a privileged partner to India in meeting these challenges. In line with our traditional strength in infrastructure development, we remain committed to strengthening India's energy, transportation, and urban infrastructure—sectors that are critical for a vibrant investment climate.
We are also working on innovative mechanisms for bringing more finance to the infrastructure sector. I'm pleased to mention the recent partial credit guarantee facility set up by India Infrastructure Finance Company Limited in collaboration with ADB.
ADB is also engaged in an initiative to stimulate inclusive business ventures in 10 Asian countries, including India, under which we have performed country market studies and developed an impact assessment tool.
A large share of ADB's assistance is focused on India's lagging states, making our work strongly inclusive. As all of you would agree, nothing is more important to improving economic opportunities in these areas than ensuring better connectivity, power, and promoting new growth centers through appropriate infrastructure, including through high-priority economic corridors.
I am sure you will have a fruitful exchange of ideas today on 'innovation for inclusion'. I would like to reiterate that ADB stands committed to partner with the country towards this important endeavor.
1. 57% of India's youth suffer from some degree of unemployability. Graduates constitute only 7% of the 15 to 60 year-old working age population. 40% of this cohort is illiterate. Only 52% of those who pass the secondary level enroll for higher education. While 90% of the employment opportunities require vocational skills, India's education system continues to focus on rote learning. Moreover, recent surveys show that only 30% of India's IT graduates, 25% of engineering graduates, 15% of finance and accounting professionals are suitable for employment.