When I was a student at Cambridge University about 50 years ago, I attended a lecture by one of my best teachers, Lord Nicholas Kaldor. In that lecture that he delivered after visiting China, on the capitalist revolution in the light of Keynesian economics, the conclusion he made was that there is no technical necessity for any system to do better than the other, for socialism to do better than capitalism or vice versa. It all depends on the mindset of the people who make the key decisions of a nation — the mindset of its politicians, businessmen and media barons, the mindsets of the trade unions. I think we have crossed many hurdles but we still have many hurdles to cross. India is a country of enormous possibilities. We have only scratched the surface. But I draw comfort from the fact that if you look at our top 10-15 business houses and firms, I think many of them didn’t exist in 1991. Narayana Murthy is the prophet of that era which began in 1991. That task is still not complete. India has to be a bigger industrialised nation. India has to be a big trading nation. People do not recognise that on a per capita basis we are not well-endowed with natural resources. And if we have to overcome this scarcity of natural resources, we have to be a major trading nation of the world. And if we have to be a major trading nation of the world, we have to be a major manufacturing nation of the world. The industrial revolution in England transformed England — it took away surplus population from agriculture to manufacturing. The same process has been underway in East Asia, South East Asia and in China. In all countries, manufacturing has moved forward. India has moved forward in manufacturing but we have not performed the task of taking a lot of the surplus population from agriculture to industry. I think governmental regulations, a mindset where government knew better than everybody else what is good for the country, excessively capital-intensive design of the developmental process and also the rigidities of the labour legislation that we have, have created a situation where we have industry but it does not grow at a fast enough pace to create a lot more jobs for our young. And therefore, problems of labour rigidity and labour flexibility are still hurdles in India realising its chosen destiny. I cannot believe that India’s economic and social problems would be solved only in the framework of remaining a rural economy. Rural development is essential — it is essential to make our growth process inclusive. But if we have to aspire to be a major nation of the world, a powerhouse of the world economy, India has no alternative but to be a strong manufacturing nation, the type of manufacturing that creates a lot more jobs in the process. We have done well in recent years. But I have always said growth is not an end in itself. It is only a means to enable our people to lead a life of dignity and self-respect. And unless people at the lowest rung of the socio-economic ladder can become active partners in processes of growth and development, I think we cannot rest content. And that means that along with working for labour flexibility, we must ensure that our children are well educated, reach their adulthood healthy and are not crippled by the burden of disease and malnutrition. That is why it is of great importance to spend money on health, education and on vocationalisation of education. This we will do, but governance is an issue that worries me. I think (N.T.) Rama Rao, the former chief minister of Andhra Pradesh, once said that ‘The Centre is a conceptual myth. India lives in the states.’ Unless the states’ political systems, the states’ economic management improves, I don’t think we can realise our goals. When I was governor of Reserve Bank of India some 25 years ago, I started the process of computerising bank accounts and there was a strike in the Reserve Bank. Recently, some of them (who went on strike) came to me and said that you taught us the value of computerisation. Today our daughters and sons are computer engineers. I sincerely pray and hope that we remain a functional democracy. But democracy has certain disadvantages. I have a friend in the International Monetary Fund, who went to Korea in the days it was run by an authoritarian system. They were discussing the issue of devaluing the currency. When my friend talked with the finance minister, he said, “That’s a very difficult question. You don’t expect me to give an answer right away.” When my friend asked him how much time he would need, the finance minister said, “I will take half an hour, I have to book a call to the president.” Now consider this in our system. Time is not valued, whether dealing with government files or applications for doing business, doing this, doing that, our system doesn’t value time and that’s one weakness of the Indian system that worries me a great deal. We have to work, therefore, to create a new mindset. Some ten days ago, I was in Singapore and had the privilege of meeting Premier Wen Jiabao of China, for whom I have great admiration, both for him and President Hu Jintao. I have met both about five to six times. The type of leadership that China has produced since the days of Deng, I think, is the greatest asset that China has. During my visit, Wen Jiabao gave an address to the University of Singapore in defence of opening up and the moral of that beautiful lecture was: “If you really want to get rid of poverty, if you want to become a nation that really counts, you have no option but to open up.” Going back in China’s history for centuries, he said whenever China shut its door to the outside world, it went down. Whenever it had the vision to look outward, it prospered. I think my purpose in quoting all that is to say that all of us have an obligation. The decisions that we make or don’t make — and that applies to politicians, businessmen, trade unions and all other important agents of social change —will have profound implications on the future of our country. I am at the fag end of my life. I think the best that we can do is to help transform the mindsets and this is where people like Kamal Nath, Sharad Pawar, Chidambaram, Montek have been a great help to me. I think any nation would be proud of such dedicated public servants. This is an edited version of the prime minister’s speech at the release of Union Commerce and Industry minister Kamal Nath’s book, ‘India’s century: The Age of Entrepreneurship in the world’s biggest democracy’, November 29
