He said the country can be free of corruption but we "have to start from the top".
"It can be done... Corruption is eating up our country like termites. If you want to get rid of termites, you have to inject medicine."
He pointed out that there was no allegation of corruption against his government.
"Corruption had become part of the system. Contractors were running the nation. We have taken steps to correct the system."
He said while the previous government was faulted for causing a loss of Rs.176,000 crore by giving away coal blocks, his government conducted auctions in a transparent and time-bound manner and raised Rs.300,000 crore, Modi said. "Ask yourself. Has corruption gone or not?"
Other steps had been taken to tackle black money -- from the appointment of a special probe team to enacting a stringent law.
The Central Bureau of Investigation (CBI), he said, was probing some 800 cases of black money until he took power. Now the CBI was examining 1,800 cases.
Already several thousand crores of rupees had been collected from people who had begun to declare their ill-gotten assets, he said.
In his speech, Modi repeatedly used the word "Team India" - to denote a united nation.
"This is Team India, a team of 125 crore Indians. This is the team that makes the nation and takes our nation to new heights," he said.
Modi also listed key initiatives of his 15-month government in the area of financial inclusion, fighting graft and inducing transparency, and said true economic progress must touch the bottom of the pyramid.
He said the country's youth be given opportunities and support to become entrepreneurs in their own right, notably the deprived. "In the coming days, start-ups will be promoted in every corner of the country. Start up India, stand up India," the prime minister said.
Prime Minister Narendra Modi interacts with school children after his address to the nation during the 69th Independence Day Celebrations at the historic Red Fort in New Delhi on Saturday.
"All banks in our country must contribute to a start-up revolution. Each of the 125,000 bank branches must assist one Dalit or one tribal entrepreneur and one woman entrepreneur. They must also become entrepreneurs in the future."
The prime minister said a lot had been done in the area of financial inclusion in the past year, and gave the example of his Jan Dhan Yojana, under which some 17 crore people have got bank accounts. Also, 10 crore people enrolled in social security schemes in 100 days.
"For the poor, the doors of banks were closed. I said this has to change... Bank accounts are essential for integrating the poor into the financial system. That's what we have done."
Modi announced the agriculture ministry would now be known as the Ministry of Agriculture and Farmer Welfare -- to take better care of farmers' needs.
He said he had also faced a lot of pressure against the transparent processes such as on the e-auction of private FM Radio channels. But he did not yield.
"People said radio concerns the common man. I was pressured," he said, alluding to calls for giving away the licences cheap. But the transparent process evoked a lot of interest and the 85 channels that were on the block fetched Rs.1,000 crore to the exchequer.
The government, he said, had brought down inflation despite poor rainfall, and called for a restructuring of agricultural practices.
