In his over 90-minute Independence Day speech from the ramparts of the Red Fort, the Prime Minister also stressed that his government's main aim was to empower the common Indian.
In a first for any Prime Minister, Modi referred to Pakistani human rights abuses in both Balochistan and the part of Kashmir it controls.
"The world is watching. People of Balochistan, Gilgit, Baltistan and occupied Kashmir have thanked me a lot in the past few days. I am grateful to them," Modi said, referring to his comments last week on excesses in Pakistan's largest province and in the Pakistani part of Kashmir.
He said the way people from these Pakistani regions "wished me well, gives me great joy".
In thanking an Indian Prime Minister, "they have thanked the whole population of my country", he said. "I want to offer my gratitude to these people."
Modi had said at a meeting on Kashmir last week that it was time for Islamabad to explain to the world "why it has been committing atrocities on people in Pakistan-occupied Kashmir and Balochistan".
On Monday, Modi also hit out at Pakistan for supporting terrorism. This, he said, was in contrast to the way Indians reacted with sorrow when terrorists slaughtered school children in Peshawar.
"That is the nature of India. But on the other hand, look at those who glorify terrorists. What kind of people glorify terrorists? What kind of people celebrate when people are killed?"
Modi's third speech from the Red Fort came amid continuing violence in the Kashmir Valley that has left 56 people dead in five weeks of street unrest.
Modi avoided any reference to Kashmir but warned those disturbing "unity in the country".
"All those who are killing innocents ... I want to tell them that this country will not tolerate terrorism and militancy. Return to the mainstream. The road of militancy and terrorism does not help anyone."
Modi said his governance objective was to deliver the fruits of economic development to the last Indian.
He said he was was promoting transparency in governance and listed measures the NDA government had taken over the past two years to make life easier for ordinary people.
He explained how certian shortcomings were hindering India's progress. He urged people to fight against such practices and strengthen social harmony for an overall development of the country.
"Every citizen should fight against the differences in the society on the basis of caste and class. Only economic development will not help in the development because without social harmony and unity, the development will not be complete.
"We have to take everyone together be it Dalits, tribals, oppressed and people from the financially weaker section of the society."
The Prime Minister said in India there "are a lot of problems but we also have 1.25 billion people to solve them".
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