The 1st IISS-Citi India Global Forum
India as a Rising Great Power:
Challenges and Opportunities
New Delhi, 18–20 April 2008
DINNER ADDRESS
Kamal Nath, Minister of Commerce & Industry, India
(Provisional transcript as delivered)
Introduction
Thank you Sir Win Bischoff, and thank you very much for the commercial for my book! All of you who have not read it, please do get a copy. Thank you Dr John Chipman for inviting me to be here with you today, distinguished participants.
The IISS is one of our leading international think tanks, and that leading international think tank has chosen, in its 50th year, to have a conference dedicated to India. Calling it the first IISS-CITI India Global Forum demonstrates that India is being recognised, but I am a bit uncomfortable with the title: the rising great power.
I have been asked frequently about India becoming a rising great power, and this word power often makes me uncomfortable. Yes, India is growing, and all of you are familiar with the figures. India is on a growth trajectory as never before, but India has its great challenges and its complexities. Yes, India is growing at 8 or 9%, it does have its institutional strengths, we do call ourselves the fastest growing free market economy, and we do pride ourselves in respecting intellectual property. So those of you who are here from abroad and would like to buy counterfeit goods, will not get them here, you will have to go to another Asian country to find them. We respect GIs.
The Reform Model
It was about 17 years ago when our present Prime Minister, Dr Manmohan Singh, as Finance Minister, launched India on the reform process. A reform process that was India specific. What was the reform process we had to follow - India, with all its complexities and diversities. The India specific reform process, where India could integrate with the global economy. I still remember the World Bank president, Mr Preston, telling me in 1993 that India would never make it. He told me, ‘this is not enough, this is not the reform model that is going to work’, but India chose its own reform process. It was not a reform process modelled on south and central American patterns, where the bubble burst. Not on the East Asian models, we had no Asian crisis, we rode over the Asian crisis.
We chose a reform process that helped us to globalise in a calibred process. In a calibred process that the Indian economy, business community and industry could absorb. So, today, we talk of India engaging with the global economy, just a few days ago I announced the Foreign Trade Policy, that India’s engagement with the global economy was going to hit $500 billion. If you had had this forum 10 years ago, I would have had to tell you a different story, but as you have it now, of course I say that we are engaging with the global economy to the extent of $550 billion.
Imports and Investments
We are not only an exporter, we are a large importer, and we are a large market for the western world. Our imports from Europe are going up by over 32%. Our imports from the US are going up by 35% every year. So India is not just an exporter we are a big importer. In 1991 we did not have foreign exchange for more than 15 days for our oil, today we talk over $300 billion. Of course we are looking for FDI, we want FDI, and we want technology, but India is also a big investor. Our investments in the US last year were more than the US investments in India, and India created more jobs in the US than the US created in India. This message must be taken to the primaries in the US that are taking place now.
Global Competitiveness
So India is not only creating jobs within our country, we are creating jobs all over the world. It is this engagement, and this is the new global economic architecture. It is not India, it is East Asia, because as the process of globalisation started, and so did the process of global competitiveness. When we talk of the name of the game of global competitiveness, East Asia stands out where the massive economic activity shifts from the Atlantic Ocean to the South China Seas, to the Indian Ocean, not merely in terms of large populations, but in terms of global competitiveness, in terms of foreign exchange reserves.
It is these great changes that present even more challenges, more challenges for India, in East Asia challenges of a different kind, and when all of you come to India when IISS has this global forum in India in its 50th year, what do you see on the map? What is our neighbourhood? Our neighbourhood is Pakistan, Afghanistan, Nepal, Bangladesh, and Sri Lanka. Within all these countries you see a country, an island, where there is stability, a democracy. It is not only the largest democracy in the world, we also take pride in being the rowdiest democracy in the world, if some of you have seen how our parliament functions and how combative politics gets. It is this that gives India the strength and stability.
Growth Management
It is the young India. It is a young India that is raring to go. An India where 50% of our population is around 25. Huge numbers, but as a country, as we move on, as we move on in stability, we move on with confidence. We move on with confidence, building up a momentum of growth. It is not only India’s 8 or 9%, but all the ingredients that make this 8 or 9%, the fundamentals. So when today we meet in a looming global economic outlook that is gloomy, the question is, how does India respond to this? That is another challenge. Of course we are not an externally driven or export driven economy, we are a domestic market driven economy. We are an economy today in global trying times in food, where global food prices are going up. We have 15 million people in India that are moving from having one meal a day to two meals a day. People who were having two meals a day are moving to have some more vegetables, poultry and diary. This presents the challenges today on our supply side management.
So the challenge today is growth, but bigger than that challenge is the management of growth. The management of growth is a very big challenge for India today. Where millions of people are moving ahead, our 8 or 9% growth is showing up on the radar screens in different ways. When it shows up on our radar screens in different ways the management of growth becomes a big challenge. When we say this we talk of India’s IT skills and these great figures, but we cannot lose sight of the fact that India has 300 million people living on less than $1 per day. How do we make growth reach them? How do we make it touch their lives? That is our challenge.
The Paradox of India
So when I said that I am uncomfortable using the word power, I am uncomfortable because here is a country that has more poor people than all the LDCs (least developed countries) put together. We have all kinds of conferences for LDCs, but India has 300 million – more than all the LDCs put together, with far more complexities. It is this great challenge, how we make growth touch the lives of those people, how we make growth touch the lives of the people in my own district, who voted for me for so many years.
That is the challenge, because in a democracy your shelf life can be very small, and when your shelf life is very small that is a challenge in itself in this complex India. An India that is a paradox, where we talk of so many million cell phone connections a month, but there are still so many thousands of villages that have never heard the ring of a landline telephone. That is the great paradox of India and it the need to understand these complexities.
Conclusion
When I say that I feel uncomfortable with this word power, of course we are rising, of course we are growing, but we have got a way ahead to go to reach all the per capita figures of the western world. We have got a huge way to go before we can move forward, but what we are today is an India that is vibrant, a thriving nation. India today is a confident India, and an ambitious India. We no longer dream of a better life for our children or our grandchildren, we dream for a better life for ourselves.
