New Delhi | Friday, 21 November 2008
LOOKING AHEAD: MY VISION FOR INDIA
It gives me great pleasure to participate in the Hindustan Times Leadership Summit. I thank Smt. Shobhna Bhartiya for inviting me to be a speaker at this event, which, over the years, has evolved as a prestigious forum for discussing major national and international issues.
I have been asked to share my vision for India. I must confess that I am a little wary of talking about the so-called ‘Vision Thing’ at a time like the one we are now passing through, which is truly extraordinary in the history of India and the world. Vision refers to the future, which some people can present in beautiful, lyrical phraseology. However, it is the present that demands our most immediate attention. It is good to look at the stars, but one must first know where one is standing. If the ground is full of thorns, or if there is an approaching calamity, one must first worry about how to move from an unsafe to a safe position.
We must no doubt look ahead. But right now it is necessary to look at where our country and the world stand.
The past few months have witnessed perhaps one of the most tumultuous phases in the international financial system since the end of the Cold War. Never before has the world experienced the kind of slump across the international economy that we see now. Not since World War II, has the prospect of a simultaneous economic recession affecting both developed and developing nations been so certain.
Production cuts, job losses, credit squeeze, sharp falls in commodity prices, closure of businesses, deep reduction in GDP forecasts with some of the advanced nations experiencing near-zero growth ― all this is extraordinary. Some have wondered if this is the beginning of a recessionary tsunami.
My interaction with business leaders
The situation in India is no less grim. Yesterday I had convened an interactive meeting with eminent representatives of Indian business. I must admit that the picture of the current crisis in the Indian economy that they presented was far more worrisome than what one reads in the print media or watches on the electronic media. They were unanimous in affirming that there is an all-round Crisis of Confidence in the economy. It is most evident in the functioning of the financial sector. Banks are not lending ― neither to businesses, nor even to one another.
All sectors of the economy ― manufacturing, real estate, automobiles, steel, construction sector, civil aviation, hospitality, tourism ― are in deep trouble. The scenario is bleak for exports because there is a fall in demand everywhere. The worst hit are the small and medium enterprises (SMEs). If this crisis of confidence continues, it could erode most of India’s economic gains of the last decade.
The effect of this crisis is felt most scarily in the area of employment and livelihood. Incomes have plummeted. Lakhs of people have already lost jobs. Many more face the spectre of job loss. The axe of retrenchment falls mostly on unorganized labour. Who constitute this category of unorganized labour? The poor and the most vulnerable, who have no social safety net.
UPA govt’s shocking mishandling of the crisis
Friends, I must say that I am most concerned and disappointed ― indeed, most people in India are concerned and disappointed ― at the way the UPA Government has dealt with the situation. The Government is still in denial mode, when it comes to accepting the reality of the crisis. Until a few months ago, those in responsible positions in the Government were passionately advocating greater integration of the Indian economy with the West-dominated global economy. The Government’s flawed policies led to high inflation. Thereafter, by mishandling inflation control with knee-jerk monetary measures, it created credit squeeze and throttled all sectors of the economy. Therefore, I said in my interaction with business representatives yesterday that, although the global economic meltdown provides the external context to the Indian crisis, it would be an act of escapism to attribute the severe slowdown in the Indian economy, solely or even mainly, to the global recession.
I say so for another important reason. A participant in yesterday’s interaction put it rather vividly, “Every Government should plant some seeds of long-term economic growth, irrespective of which future Government reaps the harvest.” The NDA government, led by Shri Atal Bihari Vajpayee, had planted many healthy seeds during its six-year stint in office. The country has benefited from the rich harvest they have produced during the last five years of the UPA regime. Sadly, the UPA has planted no seed in the last five years for long-term growth. It has left the field barren for the next government.
From hope and confidence in 2004 to despair and pessimism in 2009
To appreciate this point, recall the situation in 1998. The NDA Government had inherited a weak economy with less than 5% growth. The legacy of this weak economy, as well the external challenges due to sanctions imposed on India after Pokharan II, represented a big challenge to our Government. In addition, there were other challenges in the form of the Kargil War, earthquake in Gujarat and super-cyclone in Orissa.
Nevertheless, our Government took decisive steps in infrastructure development by increasing public spending as well as by promoting private investment. The National Highway Development Project, represented famously by the Golden Quadrilateral, is the largest infrastructure development project in India’s history. Along with the Pradhan Mantri Gram Sadak Yojana and Sarva Shiksha Abhiyan (for universalisation of primary education), it remains, even today, an abiding example of the NDA Government’s ambitious and visionary approach to India’s development. We opened up the power and port sectors for private investment. Our Government did not hesitate to take tough political decisions, when the telecom sector seemed like it was stuck in a quagmire of litigation and going nowhere. At the stroke of a single bold policy decision, our Government transformed the landscape of the telecom sector in India, which, among other things, also aided the IT Revolution. India’s incredible growth in the telecom sector today, rivaled only by China, was made possible principally by that one big policy decision.
Similarly, the tax buoyancy that the UPA Government has enjoyed throughout its term has been largely due to the long-term reforms in the tax administration and information systems implemented during the NDA regime.
In contrast, the UPA Government is going to leave an almost empty coffer for the next Government, which will be elected after the elections to the 15th Lok Sabha. Government finances are in a mess. Even critical infrastructure projects like the National Highway Development Project have slowed down.
The difference between the NDA and UPA governments should be obvious from another comparative fact. We started with 5% growth rate in 1998 and left the economy at 8.5%. In contrast, the UPA Government started with 8.5% growth rate in 2004 and will leave at 6% in early 2009.
It is not surprising, therefore, that in 2004 Indians exuded confidence and hope about the future. Today there is only doubt, uncertainty, pessimism, despair, and even fear.
India cannot afford a weak government with a failed leadership
The difference can also be seen in the political functioning of the two coalitions. The NDA Government was cohesive, with Prime Minister Vajpayee as the supreme authority. In contrast, the UPA is not a coalition but a mere collection of independent fiefdoms of ministers doing whatever they want to further their own personal agendas without any concern for the overall progress of the country and without any fear of the authority of the Prime Minister, who has become a passive observer. The Prime Minister has turned a blind eye to the blatant misuse of institutions as well as to shocking levels of corruption, never seen before in independent India.
Friends, I am equally disappointed that, at a time when the country is facing a multi-dimensional economic crisis, the Government has not deemed it necessary to have any consultations with the Opposition. Mature democracies all over the world have adopted a bipartisan approach in times like these. Wider consultations among political parties have also helped those governments in crystallizing their resolve for concerted action. Unfortunately, the UPA government has not followed this approach. Before going to attend the G-20 meeting in Washington, the Prime Minister ought to have consulted Opposition parties. He did not do so. Moreover, Parliament has remained adjourned and not debated in either House any of the issues relating to the economic crisis in any depth. Funnily, even though the monsoon ended quite some time back, the monsoon session of Parliament is, technically, still continuing!
This, my friends, is not how India should be governed if we want our country to reach heights commensurate with its potential. Moreover, India cannot afford a weak Government with a failed leadership at a time when, in addition to economic insecurity, our country is also facing grave threats to its internal security.
Crisis presents a unique opportunity for India to take a big leap forward
India needs a strong leadership and a strong government which has both the capacity to overcome the current crisis and also a clear vision to resolutely pursue long-term goals. I say so because I believe that the current crisis, hurting though it is, presents a unique opportunity for India to take a big leap forward. We can achieve India’s renaissance in the backdrop of the extraordinary changes taking place in the global economic and political order. It falls upon the present generation of leadership and our civil society to offer an intellectual and strategic template for the nation to move forward, one that is consistent with the self-image of a proud and ancient nation and one that serves the socio-economic aspirations of the majority of Indians.
The western monopoly over global economic processes, one that has lasted for over two centuries and which gave the West a dominant position as the principal arbiter for the international community, has now most certainly run its course. No statistic demonstrates this more succinctly than the fact that India’s foreign exchange reserves are greater than the IMF’s current reserve balance.
I urge all my fellow Indians to appreciate the gigantic forces of history at play. For the first time since the early 1800s, India along with China and other non-European nations are on the cusp of achieving a dignified position in the international political economy. When compared to the excesses of the western world, Asian frugality stands in sharp contrast. In fact, it is precisely this aspect ― the surplus of Asian savings ― that has sustained the debt-ridden lifestyle of the average American household. China’s $1 trillion plus foreign exchange reserves denominated in US government bonds exemplify this fact. The fact that the emerging world has emerged as the principal creditor for the international economy is one of ironies of the last decade. It is also a manifestation of the relative decline of the industrialized economies.
The ongoing credit crisis is the final culmination of this global imbalance ― America’s quest to live beyond its means. Thus, rather than calling for a restoration of this unhealthy economic relationship between Asia and the West ― whereby the latter continues to draw upon the savings of Asian households to finance their exorbitant lifestyles ―, and rather than being worried about the de-industrialization of the West, it is incumbent for the emerging economies such as India to begin massively re-industrializing at home.
And for this to become a reality, the rejuvenation of rural India, driven into penury and indebtedness by the neglect of the past years ― the kind of debt-induced distress that has caused thousands of farmers to commit suicide ― ought to be the starting point for a new economic philosophy by the next Government. It will indeed be the starting point, if the NDA gets the mandate to form the next Government. We know very well that a failure here would involve facing the dangerous risk of alienating the majority of rural India, and destabilization or even complete breakdown in the nation building and development process.
Let me sum up by saying that a future NDA Government’s economic and governance strategy will be radically different from that of the incumbent government. We shall take all those measures that are necessary for restoring hope and confidence among the people within the first six months. But we shall also aim at the stars, at taking India to greater heights in every sphere of national accomplishment. Our strategy will aim at the allocation of resources and wealth generation that is equitable and balanced, both socially and geographically.
A future NDA Government will make the deepest and widest ever dent in poverty, unemployment and underdevelopment. It will create the largest ever basket of opportunities for young Indians, who are already authoring so many exciting success stories. I believe that all this is possible to achieve through Good Governance. We shall keep top echelons of Government free of corruption, and also take resolute steps to stem corruption in the rest of the system.
In our engagement with countries in the international community, both big and small, we shall come across as TRULY INDEPENDENT – both in thought and in action. India cannot and will not be an adjunct to any foreign power.
Our strategy of Good Governance and Development will focus on rejuvenating India’s internal strengths, strengthening our democratic institutions, and deriving strength from our rich cultural strengths. Our ancient civilization has many lessons for creating a healthy and happy society in modern times. We must preserve our family and community values, which have been eroded in the misconceived pursuit of modernization. We should be proud of our inclusive national ethos. It teaches us to respect all faiths, while strengthening the unifying bonds of Indian nationhood. When I see young Indians, I am amazed at how talented they are and also how patriotic they are. If we ― and I refer to all those who are in politics and government at various levels ― can show a firm commitment to Good Politics and Good Governance, our youth can indeed create a miracle within a short time. This gives me the confidence that, with determination, discipline, unity and hard work, Indians can indeed make the 21st Century an Indian Century.
This, then, is my Vision for India’s Future. In talking about the Future, I had to necessarily talk about the Present.