Statements, Speeches, Interviews

Statement at Informal Meeting of SAARC Finance Ministers

4th May 2008

Following is the text of the statement by Finance Minister, Shri P.Chidambaram at the informal meeting of SAARC Finance Ministers in Madrid, Spain today.
“ I would like to welcome your Excellencies to the Informal Meeting of the SAARC Finance Ministers.

  • SAARC meetings are important and we must maintain the momentum of activities for the greater good of our people.  Against the back drop of increasing international efforts aimed at strengthening regional and global cooperation and integration, our efforts aimed at regional cooperation and integration among the SAARC countries assumes particular significance.
  • As the countries in SAARC are working to build a web of linkages with countries within and outside South Asia, there is growing need to build economic, social and infrastructural connectivity within SAARC.   The 14th SAARC Summit clearly brought out that improved regional connectivity in South Asia would also be a strong catalyst in promoting trade and economic cooperation in the region.  It is a matter of satisfaction that SAARC has begun to attract greater interest within Asia.  Afghanistan has been admitted as the Eighth member of the SAARC and as of now seven observers from outside the region viz. China, Japan, Korea, US, EU, Iran and Mauritius have been attending the recent Summits.  SAAARC has definitely benefited from these external linkages and we hope this will further our economic integration with the international community. 
  • The extent and quality of a country’s infrastructure plays a vital role in economic growth, with direct and indirect effect in reducing poverty.  Almost every country in Asia is faced with the daunting task of providing good infrastructure to its citizens.  The GDP growth rates in many countries including India are adversely impacted on account of inadequate infrastructure.   There is a growing clamor from some quarters that public sector engagement with financing of infrastructure must be drastically reduced.  Even in the Long Term Strategic Framework (LTSF), ADB has projected that by 2020, 50% of its total lending is likely to be through the private sector operations.  I would urge that we advise ADB to proceed with caution.  I am convinced that ADB must continue to engage effectively with the public sector to address the massive task of eradicating poverty in the region while also increasing its private sector operations.  It should not be a case of substitution of one by the other.  The continuing importance of the public sector can be seen by the investment requirements in India in the next five years.
  • It is our estimate that out of the 500 billion dollar investment requirement in core infrastructure in India in the five years, only 150 billion dollars would be contributed by the private sector.  This would perhaps be the most ambitious public private partnership programme in the world.  However, the contribution of the public sector would be a significant 350 billion dollars.  Clearly, the role and responsibility of the public sector has not diminished.
  • On environmentally sustainable growth, we support the global focus on climate change and urban environment.  India is committed to following an environmentally sustainable energy policy with a spirit of mutual accountability and the principle of “common but differentiated responsibilities”.  In this context, India urges ADB to secure larger amounts of financing resources at more concessional terms for energy efficiency and clean energy Projects.
  • It is a matter of concern for us that the ADB is facing headroom issues concerning resource mobilization on account of inadequate equity base.  For nearly two years now, India has been stressing the need for augmenting the capital resources of ADB.  We have now come to a situation where any delay will be at the cost of ADB’s commitments and its credibility.  There is an urgent need to start the discussions on augmenting the capital resources of ADB.    We will need to finalize the GCI proposals before the next meeting of the Board of Governors.  It is in the interest of the SAARC countries that a concerted effort is made by all of us to press this point.
  • Economic and financial connectivity is the unassailable logic of a globalized world if the benefits of globalization are to be maximized and enjoyed among different regions and groups. It is in this context, we discussed crucial issues like development of Capital Markets in South Asia; early operationalization of SAARC Development Fund (SDF) and finalization of Agreement on Protection and Promotion of Investments when we met in New Delhi in September last year.  I am happy to note that substantial developments have taken place since then.  Both the draft Agreement and the operational guidelines on SDF have been finalized.  India and Pakistan have prepared the Concept Papers on the three areas of women empowerment, teachers training and maternal and child health as committed by them.  India has taken necessary internal approvals for releasing of its voluntary contribution of US $ 100 million and assessed contribution of US $ 38 million and is ready to release the funds.  There has also been a forward movement in the text of the Agreement on Protection and Promotion of Investments.   The SAARC Colloquium on Capital Markets held last month was also very successful.
  • I would like to point out here that the discussions on financial and infrastructure connectivity must be built on the bedrock of developments in other areas within SAARC.   I am happy to learn that various SAARC mechanisms have started focusing on developing specific short, medium and long term projects to impart specificity to our cooperation efforts so as to deliver direct benefits to the people.  The land and the interim-CEO for the South Asian University have been identified.  The pilot project connecting one/two hospitals in each of the SAARC countries with 3-4 Super Specialty hospitals in India has also started between Bhutan and India.  India is also proposing projects on the solar rural electrification for 300 houses in a country; project on water harvesting in Sri Lanka and Bhutan; setting up seed testing laboratories; tele-education project and sharing of India protocol of optimally utilizing rhyzobium bacteria for increased nitrogen fixation for high yielding pulse.  The draft Agreements on Mutual Legal Assistance in Criminal Matter, Motor Vehicles and Trade in Services under SAFTA are being considered and negotiated. 
  • Lastly, I would underline that there can be no economic progress in the region without peace and security.  A major theme at the 13th Summit was cooperation in counter – terrorism.  I would urge that we collectively pledge to meet this challenge single mindedly for the benefit of the entire region.   The first meeting of SAARC Home Ministers, which was held in Dhaka on May 11, 2006, called upon member states to provide enabling legislation for the Convention on Suppression of Terrorism.  An effective implementation of this Convention and the Additional Protocol will help us collectively tackle the problem of terrorism.”