Indian Prime Minister Narendra Modi pledged to provide bank accounts and life insurance for millions of poor people while seeking to revive manufacturing in the country to reduce reliance on imports.
Modi announced the plan to give bank accounts and 100,000 rupees ($1,643) of life insurance to poor families during a wide-ranging Independence Day speech in Delhi in which he hailed women’s rights, denounced religious violence and urged a clean environment. He also called for foreign companies to set up manufacturing facilities in India.
“I want to see an India which has zero imports and all exports,” Modi said at the Red Fort today. “We should stress on zero defect while manufacturing products. We should strive to make products which are accepted globally and also should not harm the environment.”
Modi is seeking to revive Asia’s third-biggest economy after taking office in May with India’s biggest electoral mandate in 30 years. The rupee has been Asia’s second-worst performer since then after Modi blocked a global trade deal, refrained from cutting subsidies in his first budget, and didn’t allow foreigners to hold majority stakes in defense companies.
“It was great oratory, extempore, still reasonably strong announcements were missing,” A.S. Thiyaga Rajan, a senior managing director at Aquarius Investment Advisors Pte in Singapore, which oversees $450 million, said by e-mail today. “No major announcements have happened except in insurance, which has been held up. After the budget people were thinking things will happen slowly but no indications on any of that.”
Modi said his party members “are not those who want to move ahead on the basis of our mandate” and will seek consensus while governing. Opposition lawmakers yesterday blocked a bill proposing a higher foreign ownership cap in the insurance sector, raising concerns that Modi will struggle to pass laws to revamp land policy and to start a uniform goods and service tax.
Modi lamented that millions of Indians who had mobile phones don’t have bank accounts. The insurance cover will help the poor cope with unforeseen setbacks, he said.
“Economic development must benefit poor and it should start from here,” Modi said.
The World Bank estimated in 2012 that 65 percent of adult Indians don’t have a bank account. That’s about 530 million people, more than the U.S. and Brazil combined, or the whole European Union. In China, by contrast, 36 percent of adults don’t have a bank account.
Modi’s plan will include identifying the poor, creating unique biometric identifiers for them, opening linked bank accounts, and making government transfers into those accounts, Reserve Bank of India Governor Raghuram Rajan said earlier this week. The previous administration had invested $550 million in a similar program.
Last month, the RBI proposed allowing mobile-phone companies and supermarket chains to set up banks that can take deposits and transfer money for customers in rural areas.
Planning Commission, a Soviet style body that formulates five-year plans, would soon be replaced with a new institution because of the change in India’s economy, Modi said today.
“If we have to take India forward, then states will have to be taken forward,” Modi said. “The importance of federal structure is more today than it was in last 60 years. We need an institution of creative thinking.”
Modi’s speech “laid out the direction of government policy and its priorities,” Deven Choksey, managing director at Mumbai-based K.R. Choksey Shares & Securities Ltd., said by phone. “The market will take confidence from Modi’s approach.”