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10 Jun, 2008

India Wary As Chinks Emerge In Its Economic Armour

Although India’s economic strength and growth potential dominates the headlines, Prime Minister Dr Manmohan Singh also notes that “the most important lesson of the 20th Century is that no nation is an island into itself.”  Indispensable reading for all those dealing with India, this dispatch contains a set of policy speeches by top political decision makers which clearly reflect India’s concerns in grappling with internal, external and natural risks to economic growth, such as rising oil and food prices, security and water. Indeed, the issues raised have global significance, and should be carefully noted by travel & tourism industry leaders worldwide.

In this dispatch:







[Editor’s Note: In order to prevent any inaccuracy, all numbers in the following are being retained in their original Indian reporting format. One crore is 10,000,000, and one lakh is 100,000. Pls use www.xe.com for conversion]


June 05, 2008 – The Prime Minister, Dr. Manmohan Singh, has written to all Union Ministers urging them and their subordinates to cut back on travel and administrative costs as part of a “charity begins at home” austerity package in the wake of rising oil prices. He indicated that if the public was being asked to bear the cost of rising oil prices, the ministers should lead by example. The full text of the Prime Minister’s letter to his Cabinet Ministers:

“You are aware of the huge burden imposed on our financial resources due to the continuously rising trend in global oil prices and our dependence on import of crude. As we initiate steps to meet this resource crunch, it is inevitable that some of the burden would have to be borne by the public. We need to explain to the people the constraints and reasons that have compelled the Government to introduce these measures.

Simultaneously, however, it is equally necessary for us to introduce the utmost economy in our own administrations and establishments. It cannot be denied that there is substantial scope to reduce expenditure on travel and administration. As we ask the people to bear some of the financial burden of our oil imports, it is not only necessary from the resource conservation point of view but also as a moral duty to cut out all wasteful expenditure in our own establishments.

I am, therefore, writing to ask you to severely curtail expenditure on air travel, particularly foreign travel, except in cases where it is deemed to be absolutely necessary. This economy may be made applicable immediately for your own self and also for all senior functionaries in your Ministry.

While instructions will be issued to the Cabinet Secretary to introduce more rigorous scrutiny of foreign travel proposals, the best prudence can be exercised at your own level with regard to both foreign and local travel for you and your officers. I seek your fullest cooperation in this matter of importance and urgency.”



Wednesday, June 04, 2008 – Prime Minister Dr. Manmohan Singh addressed the nation on TV to explain why the burden of oil prices had gone beyond the ability of the government to bear, and could no longer avoid being passed on to the public. Mindful of an election coming up next year, the Prime Minister sought to carefully explain the situation to the public, and urged them to cut usage. His worry about the economic impact emerges clearly in the speech, the full text of which follows:

“It has been some time since I have had the opportunity to speak to you. In the time that has gone by, our country has marched forward as one of the world’s fastest growing economies. This has enabled us to generate revenues that have been invested for the welfare of our people – in employment generating programmes, in farmer’s welfare and in building our social and economic infrastructure.

As I speak to you today, I feel confident that the people of India will continue to demonstrate their creativity and potential for high growth. I assure you that our Government will continue to pursue policies that will make our growth process more socially inclusive; more meaningful to all sections of society; more beneficial to our farmers, artisans, and industrial workers.

In the past four years, we have vastly expanded programmes which directly affect the poor and marginalised sections of society. We now have a universal rural employment guarantee of 100 days which is a unique social safety net for the rural poor. Farmers and agriculture are getting attention unprecedented in the last two decades. The result is that agricultural production is rising much faster now than a decade ago.

The education system has been has been expanded at all levels and we have tried to ensure that the nutritional status of our children improves through a universal mid-day meal programme. Bharat Nirman and the National Rural Health Mission and the Jawaharlal Nehru Urban Renewal Mission aim to provide better infrastructure and health care facilities in rural and urban areas. I am sure that all these efforts have started to bear fruit and no one can deny that we are moving in the right direction to eliminate poverty, ignorance and disease.

My Fellow Citizens,

However, I fully share with all of you your concern that in recent months, higher growth has been accompanied by higher inflation. Our government has taken several measures to insulate the less privileged in our society from the full impact of higher inflation. You are all aware that two important external factors have been responsible for higher inflation. First, rising food and commodity prices around the world and second, rising world oil prices.

Our government has taken many steps to increase food production and procurement, limit food exports and strengthen the Public Distribution System. All these steps, along with positive expectations of a normal monsoon, have already had a positive impact on food price inflation. I am confident that in months to come there will be further stabilisation in food prices.

Our economy is largely self-sufficient in food. We produce enough to meet our needs. For this, we salute our farming community. Our government will continue to empower our farmers and enhance their welfare. We will continue to give a fair price to our farmers for their produce. This will certainly lead to some rise in prices of foodgrains but this is the only way in which we can incentivise higher production and assure the food security of our people.

However, in the case of oil, nature has not blessed us in the same manner. We remain dependent on imports. We are, therefore, vulnerable to global trends in oil prices. When our government came to power in May 2004, we faced a price of US$ 39 per barrel for crude oil. Today, that price has gone up to over US$ 130 per barrel – an increase of over three times.

This global Oil Shock has imposed a huge burden on our finances and on the financial resources of our Oil Companies. In the past year alone, as oil prices doubled, our Government did not make any adjustments in the price of petrol and other petroleum products. Kerosene prices have not been touched in four years.

Our Government is committed to ensuring that the impact of this global Oil Shock is minimal. We wish to protect as large a section of our society as possible from its effects. This has been at great cost to government finances and to the economy as a whole.

However, business cannot go on like this for ever. We need to learn to adjust to this new international scenario. We need to be efficient and economical in our use of energy. And we need to pay the economic cost of petroleum products. There are limits to which we can keep consumer prices unaffected by rising import costs. Our oil companies cannot go on incurring losses. This way, they will have no money to import crude oil from abroad.

To compensate them, the Central Government has reduced taxation of petroleum products to the extent possible. But given the commitments of the government for vital development and non-development expenditure, taxes on petroleum products cannot be completely eliminated. Thus a rise in prices is inevitable.

However, it has been our endeavour to raise the prices only by a moderate amount. Price of petrol has been raised by Rs.5 per litre, of diesel by Rs.3 per litre and of an LPG cylinder by Rs.50. Prices of kerosene, a vital fuel for the poor, remain unchanged. We continue to bear a subsidy of Rs.250 per cylinder of LPG and almost Rs.20 per litre of kerosene. It must be appreciated that what has been done is the bare minimum, with a substantial burden being borne by the government and the oil companies.

The Central Government, oil companies and consumers are bearing a part of this immense burden. It is therefore incumbent upon state governments, many of whom tax petroleum products substantially, to also contribute to this national effort by suitably reducing state taxes and levies.

My Fellow Citizens,

Taken together, this entire effort will only bridge a tenth of the uncovered gap of over Rs. 200,000 crores. There is still a gap of almost 90% which has to be bridged. This 90%, amounting to almost Rs 180,000 crores, is being bridged by the government. The cuts in excise and customs duties will cost Rs 22,000 crores to the government. The remaining gap of Rs. 150,000 crores will be met by a combination of lower profits for oil companies and compensation to them by the government in the form of oil bonds.

I know that the price increases we have had to announce today will not be popular, even though they are only modest. You must remember that the Government is bearing the burden of issuing Oil Bonds. Our oil companies are making a large sacrifice and are under severe stress.

However, I would like the nation to remember that issuing bonds and loading deficits on oil companies is not a permanent solution to this problem. We are only passing on our burden to our children who will have to repay this debt. Cutting down on the returns of our oil companies will choke a sector vital for the growth of the economy. We need more corrective measures in future on many fronts. In the long term, our country must have a sound strategy for energy security.

To begin with, each one of us can conserve energy and contribute to national security. I urge every citizen to conserve energy at every step, every minute of the day. Be it petrol, diesel, kerosene, LPG, electricity or even water – let us learn to save and use efficiently. Let us reduce wasteful consumption of petrol.

Finally, we have to develop alternative sources of energy, whatever be the source. We cannot remain captive to uncertain markets and unsure sources of supply. We have to develop renewable sources of energy, including nuclear energy.

My Fellow Citizens,

Today more and more of our people are enjoying the fruits of development. It is the responsibility of the Government to ensure a secure future for all our people and for future generations. We cannot think only for ourselves, for the present, for the here and now. We must think about what is good for future generations – for the welfare and security of our children, grandchildren and their children. It is our duty to ensure their food security and energy security.

The steps taken today are part of that process. I hope each one of you will strengthen our hands in building a strong, secure and caring India. An India where the “aam aadmi” (general public) feels safe, secure and hopeful about the future.



Sunday, June 01, 2008 — The Minister of State for Defence Mr MM Pallam Raju addressed a security conference in Singapore on the subject of ‘Making Defence Policy in Uncertain Times’. Quote: “Connectivity and the same technologies that drive global growth and progress have made terrorism more potent and international, the WMD threat more serious, pandemics more probable, and raised the stakes for transnational crime.” The text of his speech:

The term ‘uncertain times’ provides an interesting context to the discussion we hope to have during this session. For a policy maker dealing with security situations, all times have been uncertain. More than two centuries ago, when the world was considerably simpler, Charles Dickens captured this sentiment with the paradox of the coexistence of ‘the best of times’ with the ‘worst of times’.

What certainly has changed since then is the complexity of the uncertainty and, to a considerable measure, its spread as well. We have to deal today with far more variables, which make any security calculus infinitely more difficult. At the same time, living as we do in a more integrated and globalised world, the comfort offered by national boundaries no longer constitute effective defence. As the situation in Afghanistan demonstrated, uncertainty anywhere affects security everywhere.

What then are the key factors of our current uncertainty? To begin with, there are domestic challenges emanating from poor governance, lack of development and extreme ideologies. There are then larger regional concerns when such factors spread beyond national boundaries. Obviously, the behaviour of states towards each other is a critical factor in assessing both regional and global uncertainty. While the pursuit of national interest is legitimate, doing so with disregard for international norms such as non-proliferation adds to global volatility. At a global level, divergent beliefs, competing demands and conflicting goals can become a basis for differences.

The making of defence policy is, in essence, devoted to the management of challenges at these three levels. The problem is to get our reading at each level right, factor in the imponderables the best we can, and obtain desired outcomes regularly and consistently. This task is made more difficult by the Dickensian paradox, where positive trends parallel the negative, and human advancement cuts in both directions.


Allow me to briefly describe our present predicament. On the positive side, the world in general and Asia in particular have witnessed a period of extraordinary growth. Our quality of life is visibly improving, poverty rates have dramatically declined, nation states have consolidated themselves, regional and international cooperation have grown, the benefits of technology are increasingly enjoyed by the many, and a sense of global norms has taken root.

Yet, the very nature of our progress has produced increasingly intricate security problems, made even more challenging by the process of global integration. The very connectivity and the same technologies that drive global growth and progress have made terrorism more potent and international, the WMD threat more serious, pandemics more probable, and raised the stakes for transnational crime. In responding, we face four broad conceptual issues:

i) The progress of globalisation is taking us into uncharted territory, making it hard to predict successes or anticipate problems. What does the future hold in terms of energy, water or food security? How uncertain will competition in these areas make the world? When the past, present and future are so different from each other, policy making is not made easier.

ii) While our challenges are likely to be more global and trans-national, yet our approach to them continues to be largely national in nature. This is particularly inadequate in situations where power centres may not be nation states. We are already grappling with this problem in a rather unsatisfactory manner.

iii) Global security architecture is characterised today by less rigidity and greater freedom of choice. While generally a welcome development, this calls for more sophisticated hedging strategies on part of all states. The pursuit of competing interests need not constrain cooperation in other areas.

iv) Our ability, collectively or nationally, to address these challenges is as uncertain as the problems themselves. Future directions of growth and the extent of global interdependence cannot be accurately predicted. While we can assume that interdependence will place limits on competition, the degree to which this will happen is still far from certain.

With this overarching perspective, I would like to share with you all my thoughts on India’s defence policy making in these uncertain times. In terms of the specific concerns that we seek to address, I would categorise them using the three levels mentioned earlier:


In respect of domestic security challenges, our concerns emanate primarily from forces that ideologically challenge India’s pluralistic and secular character. By espousing ethnic or religious extremism and advocating separation, they seek to threaten the Indian identity. Many of these groups obtain sustenance from outside. While we recognise that pluralistic cultures are broadly under threat from narrow and sectarian beliefs the world over, India which lives in a particularly difficult neighbourhood, has borne the brunt of such attacks much longer than most other states.

In recent years, the consequences of uneven growth and unmet expectations have added to our vulnerabilities. The internal security dimension occupies a significant portion of our policy making attention. Our defence policy aims to deter the exploitation by external forces of our internal vulnerabilities while we fashion a domestic political response, which draws on our democratic strengths. On the whole, the nature of the challenge is predictable and manageable, even if there is not a ready end in sight.

The neighbourhood, however, gives us much less cause for complacency than our domestic prospects. While India’s economic growth has created an enormous sense of optimism in our society, this is not quite the case with our neighbours. Some are seriously afflicted by terrorism, itself a cause for concern to India as a neighbour. Such concerns are further aggravated when that terrorism spills over into India, through state sponsorship or otherwise. Undeniably, we have a difficult history with some neighbours and the political challenges are no less formidable than the physical terrain of our borders.

For its further growth and prosperity, India clearly needs a secure and peaceful periphery. To ensure that, we are seeking to give our neighbours stakes in our own growth through trade, investment and services. The challenge is to convince them that we are all better off growing together rather than expend energies checking each other. To this end, reviving old affinities are helpful in building new interdependence.

Regions like Southeast Asia have been inspiring in this regard. In the last few years, considerable progress has been made towards the goal of a more integrated South Asian region. Politically, the successful holding of elections in many of these states is itself a cause for encouragement. But, at the end of the day, regional cooperation will only gather momentum when the salience of hard security is reduced.


The global situation too offers a very mixed picture for defence policy makers. On the positive end of the spectrum, the post Cold War world marks a departure from structural rigidities that significantly constrained our freedom of choice. As a result, there is considerable scope for new partnerships and initiatives. At the negative end, we are staring at the prospect of state collapse and rise of non-state actors, including in our proximate region. Somewhere in between, there is the equally complicated challenge of establishing appropriate equations among nations at a time when their inter se capabilities are changing.

India finds itself well placed in this regard, partly because it enjoys cordial ties with the other major players, and also as the culture of non-alignment has given it considerable experience in global political hedging. Policy making in this area rests on two key assumptions – (i) that the natural competitiveness among nations would continue, but will be constrained by an interdependence among major states that has increasingly become a source of global security, and (ii) the real threats to international security would arise from states that would avoid interdependence, particularly with neighbours, and from non-state actors.

The growing integration of India with the world economy also imposes its own responsibilities on our defence forces. Our exposure to the external world has tripled in the last 15 years. Our trade interests have expanded steadily, as have our investments abroad. We have developed a legitimate interest in securing our supplies of external natural resources. The number of Indians who work and live abroad has also grown significantly.

For a variety of reasons, the rise of India does not evoke international disquiet. On the contrary, we find that there is a new interest on the part of many countries in partnering India on security cooperation. Past historical connectivity and shared traditions have been helpful in forging new defence bonds, particularly in Southeast Asia and West Asia.


With its vigorous democracy and strong individualism, India has a natural ability to relate across cultures. The long term challenge for India, as indeed for every other major nation, is its ability and willingness to contribute to public good. We certainly have the latter, with a long and distinguished record in UN peace-keeping operations to show. The ability will, no doubt, rise with time and with our own economic growth. In the meantime, we remain focused on responding to challenges within our capacity, such as ensuring safety of sea lanes, enhancing the security capacities of our partners, and responding to natural disaster situations.

A larger Indian economy will obviously provide a greater resource base for our defence forces. Equally, they will lead to more burdens and greater responsibilities. How they will balance out is difficult to predict. Taking into account the various constraints that we face at the current stage of our development, much of the answer to our security concerns lie in the realm of international politics.

In Asia, unlike in Europe, an acceptable security architecture is still far from being evolved. We not only need an open architecture but an open mind in undertaking joint activities as well. It is equally important that our responses to new challenges are not determined by old theologies. Nor indeed can we afford to overlook, as we have done in the past, critical threats such as WMD proliferation for tactical political considerations. Uncertain times require greater creativity and more jointness among nations.

It would certainly help if decisions of global import were seen to have greater legitimacy, taken by institutions with a more representative character. Where India is concerned, our efforts in defence policy making will give particular priority to expanding the range of our defence contacts, enhancing confidence and comfort levels, building habits of cooperation and encouraging greater interdependence. There can be no better forum than the Shangri-la Dialogue to send out this message and I thank the IISS for the opportunity to do so.”



June 02, 2008 – Prime Minister Dr. Manmohan Singh addressed the AGM of the ASSOCHAM in New Delhi. Quote: “At a time when we in the developing world are standing our ground in dealing with the challenges and opportunities of globalisation, it is regrettable that the forces of protectionism are gaining ground in many developed countries.” The full text of his speech:

“ASSOCHAM is not only one of the oldest chambers of business in India, but it is also one of the earliest to embrace the logic of an open economy. Your leaders have been consistent in their steadfast support for liberalisation of our economy. I recall the events of 1991 when we opened up our economy to greater external competition. I take this opportunity to once again express my gratitude for your support, your encouragement and your guidance to carry forward this process of liberalisation.

Our country and our people are today better off as a consequence of the steps we took in 1991. It is fitting that this year, therefore your President is none other than Mr Venugopal Dhoot. His organisation is the proud face of India’s economic globalisation. With businesses around the world, his enterprises have become building brands of a globally competitive Indian economy and have helped to the building up of Brand India.

The important thing is that we now have scores of Dhoot families around the country in a growing range of industries and services. I have often called them the “Children of Reform”. None of them had any global experience in 1991. Few had even a national presence. Within a span of one generation, many of your enterprises have emerged as national brands and global players. This is living proof of the enormous creative and business potential of the people of great country. More wealth and more employment have been created in India by Indians in the past two decades than probably in the previous two centuries.

The performance of the Indian economy, the improvement in the standard of living of our people and the decline in poverty since 1991, stand testimony to the success of the strategy we adopted at the time. There was no shortage of critics, of Cassandra’s of gloom and doom. Today we all derive satisfaction and take pride in the achievements of our economy and in the fact that the people of India have risen to the challenge of globalisation in the last two decades in a handsome manner.


The world recognises today that the Indian route to globalisation has been a more stable and sustainable route. We have avoided many of the pitfalls that other developing countries and centrally planned economies got into. The steady acceleration to 5.5% growth from 1980 to the year 2000, and to nearly 9% since 2004, bear testimony to the wisdom of the saying, “slow and steady wins the race”! The Indian tortoise will win the race against the many Asian hares!

I am also happy that in these past 17 years, despite the many changes in Government with different political parties wielding power in Delhi and in the States, there has been no reversal of the processes of economic reform and liberalisation. Rather, successive Governments have taken forward the process and the Indian economy is today more globally integrated than ever before. Foreign trade now accounts for more than 40% of the GDP of our country. This ratio is higher than in the case of such developed economies as that of the United States and Japan.

Globalisation is both an opportunity and a challenge. In some cases it could also pose a threat to the survival of existing forms of business organisations. In economic and social phenomena, the biblical saying ‘to him that hath shall be given’ has unfortunately wide applicability. As such, liberalisation of the economy has to be accompanied by purposeful state intervention to protect the weak and marginalised sections of society and in particular to help build up their capacity to share equitably in the fruits of development. In this context, great importance attaches to the growth and development of social services like education and health and to processes of skill upgradation of the Indian youth. The challenge before us is to derive the benefits of globalisation, deal with its challenges and protect ourselves from the threats it also poses.

India is too big a country to remain insulated from the processes of globalisation. Indeed, through all known history India has been an active participant in the processes of globalisation. I do sincerely believe that the Indian people have the creativity, the skills, the enterprise and the resilience to benefit from globalisation and to deal with the challenges and threats.


However, that it is incumbent on the Government to do all that it can to facilitate this process and to make globalisation a win-win game. The State has to help invest in building the capabilities of our people and our economy, to guide and assist our businesses in dealing with the opportunities and challenges they face. Our Government has paid special attention to improving the capabilities of our people and our economy in dealing with these opportunities and challenges. We have stepped up public investment in education and in infrastructure sectors. We have opened up the infrastructure sectors to Public-Private Partnership and to increased private investment.

Many sectors of our economy are today stronger and more competitive than ever before. This is why despite the global slow down and the many global challenges we face our economy is still able to deliver close to 8% growth rate. I am confident that we will be able to sustain the growth process and overcome the challenges we face on account of the global slow down.

I am, however, concerned about the impact of rising oil prices, rising commodity prices and the growing threat of protectionism from the developed economies. The unrelenting rise in crude oil prices threatens to disrupt the development process in a large number of oil importing developing countries. It can have adverse consequences for the global war against poverty. We therefore need a new global compact between oil producers and the developing world. We need global leadership. We need greater global compassion.

The processes of globalisation will also be threatened by the rise in global commodity prices, particularly food prices. Many developing countries have been forced to impose controls on commodity exports and increase subsidies on imports. Here again, we need a new global compact so that rising food prices do not threaten the process of global integration. Increased investment in agriculture and greater emphasis on new technologies to bring about a quantum jump in agricultural productivity have to figure prominently on the new global agenda for the management of an integrated globalised world economy.


At a time when we in the developing world are standing our ground in dealing with the challenges and opportunities of globalisation, it is regrettable that the forces of protectionism are gaining ground in many developed countries. Developing countries like ours, recognise the importance of a liberal and rule based international trading system. We, therefore, have a stake in the successful outcome of the Doha Round of Trade Negotiations. I hope that the developed countries will not forget the development dimension of these Multilateral Trade Negotiations. It takes two hands to clap. I therefore, urge the developed economies to play the role they are expected to in sustaining global growth processes, generating new employment opportunities, opening markets and reducing global poverty.

The most important lesson of the 20th Century is that no nation is an island into itself. Building walls and looking inward does not offer a solution to the problems of growth and development. Equally pursuing beggar-thy-neighbour policies also do not offer lasting solutions. Open economies and open societies functioning within consensually arrived rules of the game alone can deal with the challenge of globalisation and economic growth.

I hope your Annual General Meeting will take note of this change in the debate on globalisation. Two decades ago or even a decade ago, we in the developing world, were worried about globalisation. The voices of protectionism were heard more loudly. The voices of protectionism are now heard more vividly in developed countries. It is in the developed countries that we increasingly hear such voices. Let me emphasise that this is not just a happy reversal of the roles. There can be no reversal of the roles possible until we are able to create a more equal world. Unless we banish mass and chronic poverty from the developing world. Until the developed world is able to bridge the development divide that separates the countries of the North and the countries of the South.

Despite the impressive growth performance many newly industrialised economies and emerging markets, traditional global disparities remained a fact of life. The gap between the per capita income of the developed and developing countries remains. Global disparities are growing. Moreover, new burdens and responsibilities are sought to be imposed on developing countries in name of environment and social concerns. The time has come for the global community to take stock of the emerging situation and come forward with forward looking and equitable solutions to these problems.

At the same time, we too have our own domestic challenges to grapple with. Our Government is currently focused on reversing the recent upsurge in headline inflation rates. It has been our endeavour to tame inflationary expectations without hurting the rhythm of the growth process and also to protect the weaker sections against rising prices as far as possible. I am confident that the mix of policies we have adopted will yield results once the full impact of a normal monsoon is felt.


However, to ensure the stability and sustainability of the growth process we have to follow more prudent fiscal policies. We cannot allow the subsidy bill to rise any further. Nor do we have the margin to fully insulate the consumer from the impact of world commodity price and world oil price inflation. Economic pricing of scarce natural resources, be it water or be it oil, is essential to the sustainability of our own growth process.

Upto a point we can and we have indeed insulated poorer sections of our society. Our Government has not raised the price of kerosene in the past four years. We have very marginally raised LPG and diesel prices. Even petrol prices do not fully reflect world trends. In the case of other natural resources, especially water, we have been altogether imprudent. This situation cannot continue forever. We need therefore wider political consensus to adopt more rational economic policies.

While the Government will remain engaged in stabilising the macro-economic situation, it will also have to pay due attention to sustaining the long term growth of our economy. We have to learn to husband our fiscal resources. We have to manage our public finances more effectively. I do not wish also to see a return to the era of blind controls of the past. At the same time, we have to have the fiscal means to protect the poor from the adverse impact of inflation.

Our key priority areas have been infrastructure, agriculture and education. We have built the foundations for accelerated growth based on an architecture of inclusive growth. I am confident that the Indian economy will continue to grow at 8% to 9% rates of growth and India will emerge as one of the growth engines for the world economy as a whole.

In this process, the Indian private sector will play an increasingly important role. The creativity and enterprise of our people will continue to drive our growth process. It will be our effort and endeavour in Government to facilitate this process and provide a supportive policy environment. I am confident that India will continue to be at the top globally, among the world’s fastest growing economies, characterised by moderate inflation and exchange rate stability. I hope the proceedings at your Annual General Meeting will reinforce this mood of optimism”.



Tuesday, June 03, 2008 – The Central Water Commission (CWC) is monitoring storage levels of 81 important reservoirs nationwide. The combined live storage in these reservoirs at the beginning of monsoon i.e. 1st June, 2008 was 25% of their designed capacity and stood at 21% of the designed capacity as on 29 May 2008. The present storage is 92% of the last year’s storage and 140% of last 10 years average storage during the same period. At 19 of these 81 reservoirs, this year’s storage is 80% or less than the average of previous 10 years and in the rest, the storage is more than 80% of the average of previous 10 years.

Basinwise storage position as on 29 May 2008 is as follows: The storage position in 10 basins namely Ganga, Tapi, Mahi, Sabarmati, Narmada, Rivers of Kutch, Godavari, Krishna, Cauvery and Neighbouring East Flowing Rivers and West Flowing rivers of South is better than average of previous 10 years. Mahanadi and Neighbouring East flowing Riversis flowing close to normal and Indus is flowing deficient.

According to the Ministry of Water Resources, the average annual precipitation of water is estimated as 4000 Billion Cubic Metre (BCM) in the country and after accounting for the natural process of evaporation etc., the average annual water availability is assessed as 1869 BCM. It is estimated that owing to topographic, hydrological and other constants the utilisable water is 1123 BCM which comprises of 690 BCM of surface water and 430 BCM of replenishable ground water resources. The rest flows down to the sea.

Several measures for development and management of water resources have been undertaken to optimally utilise available resources, such as creation of storages, rain water harvesting, artificial recharge to ground water, restoration of water bodies, and adoption of better management practices etc. Storage capacity of about 225 BCM has been created so far. Presently, the total estimated storage capacity of the various projects under construction is about 64 BCM. State Governments have identified various other schemes for investigation and planning under estimated storage for such schemes is about 108 BCM.

While state Governments have to conceive, plan and implement major, medium and minor schemes for utilisation of water resources, (both surface and ground water), the central government backs them with schemes and programmes to promote accelerated irrigation, water management, repair, renovation and restoration of water bodies directly linked to agriculture etc.

A Pilot Scheme on “National Project for Repair, Renovation and Restoration of Water Bodies directly linked to Agriculture” was launched in January 2005 with an estimated cost of Rs. 300 crore with a view to restore and augment storage capacity of water bodies and also to recover their lost irrigation potential. Schemes for repair, renovation and restoration of water bodies have also been taken up with World Bank assistance in the States of Tamil Nadu, Andhra Pradesh and Karnataka. Proposals from West Bengal and Orissa have also been forwarded by the Department of Economic Affairs to the World Bank.

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