October 03, 2012
Distinguished Provost, Mr. Paul Ludden,
Ambassador Nirupama Rao,
Consul General Harish,
Distinguished Dean, Law School, Prof. Attanasio,
Distinguished members of Academia,
At the outset, allow me to convey my profound gratitude and appreciation to President Turner and Dean Prof. Attanasio for giving me this wonderful opportunity to return to my alma mater. It is, indeed, a happy home coming for me, though after a gap of over five decades.
As I entered the campus of SMU today, I cannot but reminisce the wonderful and eventful time I had spent in very formative years of my student life. I owe a great deal of my success to the knowledge that I acquired in this great University.
I am greatly indebted to President Turner and Dean Prof. Attanasio for inviting me to address this gathering on a topic of great interest, namely– ‘India Now’.
It was not so long ago that India was considered a mere idea! For over one and a half century, India was subjugated by colonial powers. Emerging independent in 1947, India transformed in diverse ways and in diverse sectors.
In the past decade or so, the global interest on India has increased by leaps and bounds. This new mindset globally is borne out of a realisation rooted in rapid economic transformation of India and the emerging role of India as a stabilizing power in the new global strategic architecture.
This is further amplified by the fact that a large number of countries, including the Permanent members of the United Nations Security Council, have entered into strategic partnerships in the last decade. Most salient aspect of such partnerships is that they are not targeted against any country; the sole aim is to bring most optimal mutual benefit to the peoples of India and other countries in such partnership.
In the last decade, India has been among the fastest growing economies of the world, next only to China. India’s GDP grew roughly by 8% over the past decade and has more than doubled in this period. It is poised to touch 2 trillion US Dollars this year. This actually translates into 5 trillion US Dollars in Purchasing Power Parity (PPP) terms, a measure more commonly followed by the World Bank and IMF. In this period, India managed to reduce poverty levels at twice the pace seen in the decade of the 1990s. Of course, a lot of work still remains to be done on the poverty alleviation front.
The world saw India even more admiringly when it staved off the disastrous effects of the worst recession after the Great Depression which shook the global economy in 2008. India’s average annual GDP growth in 2008 to 2010 was close to 8%. After the 2008 global financial crises, most analysts had predicted that India would succumb to the deleterious effects of the global financial meltdown.
No doubt, there is an economic blow back but India has so far shown remarkable strength to stay afloat due to its domestic economy and its sheer diversity. But the embedded resilience of the domestic economy to deal with the blow back surprised foreigners and Indians alike.
It appears that Europe is in the throes of a recession. The Western world is watching India with even more interest as it is becoming clear that the developing economies led by China, India and others will have to become the engine of global economic growth over the next few decades.
Already the fast growing developing economies in Asia, Latin America and Africa account for over two thirds of the incremental global output. This relentless shift in the axis of economic power is also witnessing a fascinating transition in the global institutions of economic, security and political governance, of which India is a major part. The world, including the United States, wants to see India to play a substantive role in this seminal transition taking place in the institutions of global governance. India would be a focus of attention from this perspective also.
India and the United States have built a strong global strategic partnership. President George W. Bush showed great vision and made an extraordinary political investment in the transformation of the relationship between our two great democracies. I am, therefore, pleased that my Alma Mater will host the President George W. Bush presidential library.
President Obama has carried the process of deepening the strategic partnership forward as a key factor of global stability and prosperity in the 21st century. In India, successive governments have pursued the relationship as a strategic priority. Our relationship has met the test of broad, bipartisan political support and public goodwill in both countries.
Our relationship is anchored in democracy and diversity. Our partnership covers not only political, defence, counter-terrorism and other security-related issues, but also economy, energy, science and technology, healthcare and agriculture.
Our relationship is blessed with enormous enterprise and skill, and endowed with synergies drawn from India's rapid growth and U.S. global economic leadership. We have a natural partnership for enhancing mutual prosperity and stimulating global economic recovery and growth. We see our partnership not only as a tool for growth and global competitiveness of our two economies, but also as a means for social transformation and empowerment of people.
I have just outlined why the world has focused so much of positive attention on India. All this attention has also raised expectations of India hugely.
Currently, India is under some criticism from the world media for not doing enough to derive economic growth through better governance and institutional changes. I must gently remind the critics that India is a civilisational entity and change occurs sometimes at a very slow pace. But history has shown how India has always proved its critics wrong.
To delve a bit into history, at the time of independence from British rule, Sir Winston Churchill famously pronounced that India was ungovernable and soon it would descend into social and political chaos. That was some 65 years ago. If Churchill were to be revisiting this issue now, I am sure he would watch in amazement how India has not only survived but also done well, all these years.
India is, no doubt, very large and contains one sixth of humankind. Its territory is astonishingly diverse, with its people differentiated by religion, language, caste, ethnicity, as well as by ecology, technology, dress and cuisine.
But beyond its size and diversity, what truly makes India interesting, it is undergoing change on extra-ordinary scale in several ways, that it is simultaneously witnessing an urban revolution, industrial revolution, social revolution, and democratic revolution. Of course, all this is also creating a new sense of national identity among the diverse peoples of over 28 Indian states.
The political culture of India was once feudal and deferential; it is combative and participatory now. All this is changing, even if slowly, the institutions of governance within the framework of the remarkable Indian constitution, which drives the critical pillars of democracy namely the Legislature, Judiciary and the Executive.
It is remarkable that India is witnessing these changes simultaneously. In the United States, national independence came in 18th century, industrialization in the 19th century and it became a full democracy in the 20th century. So these seminal events were staggered. In India it is occurring together, which is why modern Indian society is a true melting pot !
For instance, American capitalism had a free, unhindered run without many regulations imposed by democratic institutions for much of the 19th century. Indian capitalism is taking it roots within a robust democratic framework, often in the midst of democratic protests in nook and corner of the country. Simultaneous self-correcting mechanisms are operating within this democratic framework. This may be frustrating for foreign investors, but they gradually understand the process when they look closer.
For instance, India is currently in the process of implementing major reforms in foreign investment in multi-brand retail, which has the potential to transform the country economically. Foreign investment in multi-brand retail is capable of changing the way agricultural economy works in India.
The United Progressive Alliance (UPA) government has come up with a unique democratic model by allowing each of the 28 States to choose whether they want to invite foreign investment in multi brand retail. In my view, it is a landmark experiment in calibrated decentralization of federal powers.
While these experiments are on, the fast expanding Indian middle class is naturally keen on timely and efficient delivery of various public goods and services. The gigantic challenge, which is also an opportunity, is how over 1.2 billion people of India will move up the consumption ladder.
For starters, how will they consume energy? Over 850 million people in India with less than 3 US Dollars a day earning are the right candidates to use clean energy. Thus, lifting these people out of relative poverty and making them consume clean energy will, in some sense, has to be achieved in a cooperative and collaborative framework between India and other technology rich nations like the United States.
Clean energy and carbon optimal urbanization is, therefore, at the core of the new strategic economic and technology-based partnership. President Bush and Prime Minister Dr. Manmohan Singh made an enormous contribution to changing the global nuclear order, which led to the historic India-U.S. civil nuclear agreement in October 2008.
Prime Minister Dr. Manmohan Singh and President Obama have broad-based our energy cooperation to include not only civil nuclear energy, but also promote cutting edge cooperation in clean and renewable energy, energy efficiency and hydrocarbons. We also hope that the U.S. would become a key supplier of hydrocarbons to India, which will be in our mutual economic and energy security interests.
As I had said in the beginning, this is another reason why the world is watching the evolution and emergence of 1.2 billion people to prosperity in the vast and diverse nation called India. This process will need visionary thinking at the domestic as well as global level.
On the domestic policy place, India will have to soon take a more decisive call on what sort of consumption culture does it want to spawn for its people. A certain mode of consumption, such as excessively energy intensive, can be out rightly incompatible with the resources, local and global, available at our command. India is working out the optimal energy consumption pattern given the current and future realities in regard to energy availability.
India is already facing a difficult situation as high international crude oil prices have sent its oil import bill soaring to unprecedented levels. India’s import of oil, which accounts for nearly 80% of its consumption, has widened our current account deficit. In fact, paradoxically even as the global economy slows down sharply and the Western economies shrink, oil prices continue to rise.
The longer term solution for India is to gradually reduce dependence on hydrocarbons and move to renewable sources of energy. This is India’s biggest energy security challenge today.
India has inherent democratic checks and balances to tackle the various social and environmental spin-offs of consistently high economic growth. As spelt out by me, it is not mere growth but an inclusive growth that is the objective of our developmental policies and programmes. This requires a deepening of dialogue within India, and also with other countries as we live in the age of globalisation.
India as a nation of over a billion people, driven by the energy and enterprise of its youth, living in a democratic framework, celebrating its unparalled diversity, pursuing sustainable and inclusive growth, and fulfilling its role as a responsible international citizen, will be a major factor of global peace, stability, development and prosperity in the 21st century.