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Transcript of Dr. Montek Singh Ahluwalia, Deputy Chairman, Planning Commission interaction with Editors of Bloomberg News, Washington, DC

Washington, DC
April 19, 2006 

Moderator:
Good morning everyone. Our guest today is Montek Singh Ahluwalia, Deputy Chairman of India’s Planning Commission. He has been associated with the government in various roles for more than two decades, as finance secretary, commerce secretary, and several high-ranking positions. He has also worked for the World Bank and he has been on the executive board at the IMF. And as India’s top economic planner, he is helping shape the direction of India’s economy, both in terms of growth, exchange rate, government borrowing – or rather easing of controls on foreign investment. And even though we are leaving two hours today – (inaudible) – in the talks between India and the U.S. on the energy cooperation – (inaudible) – and the economic dialogue that was kicked off last year. The energy agreement in particular was the highlight of President Bush’s recent visit to India, and I’m sure all of you have a lot of questions. So let’s start unless Montek, you want to say something?

MONTEK SINGH AHLUWALIA: Well, I just want to say how pleased I am to be here. Thank you for inviting me. I’d be happy to take questions. If you want me to make any kind of an introductory statement, I could do that. But I suspect questions would be the best way of going forward, so great pleasure to be here.

Moderator: Okay, let’s start with the first one. India’s economy has averaged an 8 percent growth rate for the past three years. Can this pace be sustained over the next three years and what are the drivers going to be? Are they going to be the same ones, such as service sectors, IT, or are there other sectors that you think are shaping up to be more promising?

DR. AHLUWALIA: Well, you know, we are right now in the commission undertaking a medium-term exercise to get a sense of where we can get – one of the interesting things is that the improvement in growth that we’ve seen in the last several years, and especially in the last two years, the two-year average including the year that’s just ended is about 7.7 percent. These are the two years of the current government. The previous government, the three-year average just before that was about 6 percent. Well, that’s also a good growth rate, and we think that the momentum has increased in these two years, and we’re expecting that momentum will continue. Expectations have now gone very high, and so, in some ways, the target that we are being asked to explore is how much more than 8 percent can we do in the next five years? The next five years means beginning 2007.

You know, we’ve done very extensive studies and looked at other people’s work, and virtually everyone thinks that if you look at India in terms of fundamentals that it has the capacity to now move beyond an 8 percent growth rate. Of course, some people talk loosely about 10 and 12 and so on, but I think that’s a little high. The Indian economy has been gradually accelerating, so our initial feeling is that we could aim at something above 8 percent, but it would average probably less than 9 percent, though at the end of the five-year period, which is say 2012, the economy could be actually growing more than 9 percent, and this is if everything works well. This is not something, which is going to be the outcome on a business-as-usual basis. I mean, I think that the Indian economy on a business-as-usual basis will cruise along just below 7 percent without too much difficulty, assuming of course that we don’t, A, have a macroeconomic muck-up, because that is always possible in any country and assuming that there will be no reverse of the reform, which is certain that there won’t be any reversal. But to go from something below 7 percent on a five-year average basis to something above 8 percent on a five-year average basis requires a lot of extra effort. 

And I think we know what that extra effort is. The three broad areas that we’re really putting all our policy energies in are number one is infrastructure. I think what India lacks compared to other fast-growing developing country in Asia, which are the natural competitors, is really a much better infrastructure that would enable it to become competitive in the manufacturing sector. I mean, one of the reasons why we’ve been so competitive in the software areas is it doesn’t depend on too much infrastructure other than telecommunications. We did a lot of telecommunications reform, and that area has essentially shaped up. I don’t buy the notion that India is going to concentrate on services and China is going to concentrate on manufacturing. I think both economies are very large – China much larger than India – and I think both will do both. So one may be a little bit better in one, that depends on circumstances. So I think there is huge scope in India for expansion of manufacturing. It is, after all, going to be the source of a lot of growth of employment. Unlike China, much less of India’s growth is spurred by positioning itself very favorably in world markets, although we are also opening up and expecting to have a bigger position in world markets. But the growth of internal demand in India alone will justify a very substantial expansion in manufacturing.

So in terms of drivers of growth, I mean, clearly IT will continue to be a very important contributor. I think there are broader ranges of high-tech growth-enhancing kind of activities – research activities, design activities, a lot of it in partnership with companies abroad, many of which are now perceiving the comparative competitive advantages of locating research on a joint venture or a partnership, or even on a wholly owned basis in India. So these areas are going to be important.

But I would say a broad-based expansion in manufacturing simply reflecting the fact that in a fast growing economy at a relatively low level of income like India, there is going to be a huge demand for manufactured goods, and we would be obviously well positioned to provide those goods competitively. So that’s the short response.

Moderator: Quick follow-up – when you said growth will average probably less than 9 percent, are you talking about a three-year timeframe, five years?

MR. AHLUWALIA: Oh, yeah. I’m talking about the period 2007 to 2012. I mean, I should say that you know our thinking was that over the last 20 years, the Indian economy has been gradually accelerating. And that acceleration – you know – it’s not been of the kind where suddenly the economy starts growing at 9.5 percent – and China has grown at about 9.5 percent for 20 years. And I don’t see any reason why India shouldn’t be getting to that also. It’s just a question of how fast the kind of policy changes needed to support that growth will come.

The Prime Minister himself has said that we should be going beyond 8 percent. We haven’t actually come to the conclusion of what’s a feasible target to aim at. Now, obviously feasibility has to be constrained by some perception of how fast policies can change. And I think we have to recognize, the biggest thing about India is that it’s a very participative, very pluralistic, open democracy where even if the top 1,000 people technocratically came to the conclusion something is good, it has to be mediated into a political consensus. And I’m being realistic. I don’t think it’s going to be that easy to put in place everything that from a technocratic point-of-view everybody knows needs to be done. But I mean, it’s not going to be impossible to do it. So to suggest that an economy, which at the moment is probably growing on a five-year average basis something on the order of 7 percent or so, in the next five years goes to 8.5 or maybe a little more than that is, in my view, within the realm of feasibility given all of India’s constraints.

An 8.5 percent growth rate, if we achieve it, would be really terrific, because with population growth slowing down to something about 1.5 (percent) maybe even less than that, 8.5 percent growth means a 7.5 percent growth in per capita income.

Moderator: Montek, can I interrupt here? And just clarify, the Prime Minister has talked about 10, saying we could do as much as 10 percent in the next decade. And you are saying more 8, 8.5 (percent). Is the planning commission thinking differently from the government?

DR. AHLUWALIA: We’re going to feed back to the Prime Minister what we think is feasible. And I wouldn’t be surprised if – you know, I don’t think he’s actually said we should be growing at 10 – I mean, of course, I’d love to grow at 10 percent five-year average. I don’t think he actually said that we should achieve a target of 10 percent in the next five years. I mean, for example, suppose you interpret the Prime Minister, which is – we’re looking at how you interpret these things – we should reach 10 percent by the end of the tenth plan period – I mean, the next time period, eleventh time period. Then, the average won’t be 10 percent even if we reach 10 percent.

Moderator: But do you think we could reach 10 percent, given that –

DR. AHLUWALIA: Oh, at the end of the period, yeah.

Moderator:And is it such a – (inaudible) – 

DR. AHLUWALIA: That is, in my view, the single biggest thing. I also believe, and this is very, very important, the framework of policy and infrastructure does not pose fundamental political problems. I mean, the framework that we have is that we need a much better infrastructure. If you rank infrastructure as the infrastructure needed for rural areas and infrastructure needed for the more advanced part of the economy, then the former will have to be dominantly provided by public funds. The latter, there is a very big road for public/private partnership, and we have now – I mean, that is now an accepted part of policy. Nobody opposes the idea that India is going to build infrastructure through public/private partnership. And different models of public/private partnership are now being explored and actually are being put in place, so it’s not as if – sorry, yeah?

Moderator: So if you answer by clarifying what you mean by infrastructure. Do you mean just the basics of roads, schools, or manufacturing plants, or –

DR. AHLUWALIA: No, no, yeah, good question. I mean roads, railways, airports, ports, electric power, and of course, those things like gas grid infrastructure. But manufacturing plants and all the rest of it is just industrial investment. What I’m saying is that there is enough basic human competitiveness, skill endowments, et cetera; enough reassurance that the soft infrastructure for investment, both domestic and foreign, exist; enough domestic private companies that are clued on, keen to get off the ground, keen to compete globally, and enough foreign companies, including a lot of American companies, that know India, believe that policies have changed, on the whole like the environment, and would say that if you guys can put in place a sensible infrastructure, we’re willing to come in with a lot of money – not just American companies; other companies also. But that’s going to come mainly from the private sector in my view.

Question: Secretary Spellings, the education secretary, was in India all last week. And she came back on Monday and said that some of the U.S. for-profit colleges that want to set up in India are having trouble doing that, and she said they’re facing obstacles primarily on the federal level. What was she talking about and what obstacles do exist that make private companies like the University of Phoenix – (inaudible) – specifically mentioned – 

DR. AHLUWALIA: No, I think that’s a good – yeah, I should have said that doesn’t come under either infrastructure or manufacturing. You know, the issue of private colleges in India is only just beginning to be addressed. Traditionally, India has followed the European approach of essentially having publicly-funded education. Many of the education institutions are independent on the government in the sense they have their own boards, et cetera, but they’re funded by the public sector and fees are kept very low, basically as a means of encouraging access, et cetera. I mean, the IITs and even the IIMs, which are much talked about as examples of good quality higher education are actually publicly funded institutions. They’re not private institution like, say, Harvard or Stanford would be. We have, in the last few years, had a lot of private universities being set up, and there’s an internal debate going on about whether fees in such universities should be left completely uncontrolled or subject to control. And a very active debate is going on in India right now with what do you do if private universities come in without a control on fees, then are able to pay very high salaries in order to attract the good faculty, and the faculty moves out of the publicly funded institutions. 

So frankly, this is an area where I don’t think policy has actually clarified its position. I mean, the Prime Minister last year set up something called the knowledge commission, which was meant to advise exactly on what should be our policy towards higher education, including the role of private institutions. Now, foreign institutions would just be part of the private institution structure, and that is a problem area.

Question Yeah, I have one question. You mentioned earlier that the Indian technocrats agreed to a specific number of steps that need to be taken to accelerate aid support in the country. But you have to get political consensus. What are some of the reforms, let’s say, that might have to be sold to the public that it might be difficult to get others to accept?

DR. AHLUWALIA: Well, a good – I mean, for example, if you are going to have a public-private partnership in infrastructure, obviously there is going to be a revenue model for private investment, which will mean – which will be linked to the user charge that people pay for the infrastructure. Now, what we found is that in certain areas, introduction of a private partnership with people actually willing to pay for the service has not presented any problems at all.

I mean, telecommunication is the best example. But, you know, all around the world, that is a sector where technologically, there has been a huge technology change. Costs have been falling everywhere, so it’s relatively easy for people when they look at telecom to say, well, service has improved and ….. not being a problem. It really comes with electric power, for example, to actually bring in private investment. 

You will persuade people that they have to pay, and we have a lot of cross-subsidizations where tariffs are kept low for certain categories, plus being public sector entities, they have tolerated a hell of a lot of just theft of power, if you like, people simply not making a legal connection and they are not paying their bills, and obviously they get connected with corruption in the sense that whoever is meant to monitor the distribution systems is bribed off and that kind of problem.Now, transforming that is really what we are now trying to do, and it does mean in the end that consumers will end up having to either pay a higher rate because they were earlier given an unreasonably low rate, or they have been cheating and they have been forced to pay. So why – they can’t publicly say that is not fair. It leads to a sort of resentment. That is one example.

In fact – I mean, take, for example, the distribution of drinking water in urban areas. You run into – it is very easy for NGOs to whip out sentiments amongst poorer people, that what is going to happen is that a privatized water distribution system will subtly kind of move water more into the areas that are easy to service and starve the areas that are not easy to – whether they do that or not is a difficult, is a difficult issue. But public perceptions get whipped up. I mean, having said that, we are now grappling with this and I would say that in every one of these areas, including in electric power, there is evidence of improvement. So the new system is working; efficiencies are going up, inefficiency is going down but, you know, it is not yet at a level where people can visibly see, at least in the area of electric power that the new system is delivering better service, whereas in certain areas like roads or ports, that is visibly the case. Other areas like airports, it’s a service utilized by higher-income people anyway, so they don’t mind. So experience varies.

There are other areas too which are politically – let me just mention the most commonly mentioned – there is really no political resistance to opening up the economy for trade and foreign investment. Whenever somebody actually gets hurt, obviously they react, that is true all over the world. But I don’t think we are – we are no longer in a world where the idea of opening up to trade to foreign investment evokes a negative response. Labor is a big problem area. India’s labor laws need to be made a lot more flexible. We have said that; we are aware of it. That is possibly the area where having to work with the unions to get agreement is a complex issue. But, you know, frankly while they will not say it in public – I mean, I have had the opportunity to talk to a lot of Left leaders, and they realize that it ought to happen. But I suspect there strategy is there are many things we can do which would improve performance, which are not connected with labor laws, I mean, like getting, fixing electric power, improving infrastructure, and whatever. Now, if the economy manages to grow not at 6-1/2 percent, but let’s say 7-1/2 and 8 percent, the momentum that will generate, and especially if that growth is more broadly based, which is a very important objective, I think our perception is that the resistance to addressing these difficult issues will be much less, and that they will get addressed.

Question: Can I just follow on to that theme of more investment? Chevron just announced that it was going to invest 300 million in a new refinery in ….. The officials of Chevron were suggesting that that would open the door for opportunities to do some – for exploration, gas marketing, that kind of thing. What are you envisioning for the role foreign wealth in India and what is coming next? What is going to be happening a year from –

DR. AHLUWALIA: I mean, our objectives are very clear there. We are actively seeking foreign investment in oil; certainly in the upstream area of exploration. We have had a series of bidding out of oil exploration blocks. We have had increasing interest over the years. But you know, none of the American majors up till now have actually bid for the oil. Now, one reason for that – and privately when you talk to them -- is India’s oil fields are never viewed as being sufficiently attractive for any of the big majors to come into that area. It’s possible that with the new perception of what oil prices are going to be like, even smaller fields would be of interest. So we are very keen on that. I think our minister for petroleum was here maybe 10 days ago, went to Houston talking to people and encouraging them to bid. Some companies are interested in the marketing and the retail and not necessarily in the exploring. That is also welcome. And, I mean, I am aware of Chevron’s interest and we welcome that. There was no policy impediment that I’m aware of. I think we have said – we have said somewhere that to get into retail marketing, you have to have a total-exposure involvement, which comes up to a certain size. So you don’t just do a cherry-picking speaking on the detail end of the spectrum. And there is a broad range of investment which the companies could do upstream, and that should work out okay.

I mean, looking ahead, India’s requirements of oil – you know, in our energy – energy is a major constraint in our growth and we are working quite hard at trying to ensure that we don’t – we manage to grow at 8-plus percent without putting too much of a strain, if you like, on the oil market, and also without relying too much on coal, although that will be a major source of supply, which is why with the U.S., one of the major areas that, you know, we have been engaged in is opening up technology flows and civil-nuclear, and that will enable us to have a huge expansion of energy which won’t put pressure on petroleum and won’t actually require us to be burning that much coal. But having said all of that, the bottom line is that even with all of those efforts, India’s total demand for petroleum products will probably increase from around 115 million tons now, to something over 400 million tons in 25 years. I mean, that is what an 8-plus percent growth rate will automatically require.So if you look at it as a petroleum company, I mean, India is going to need a very large amount of petroleum products, and the market is open for investment – 100-percent foreign investment is allowed if they want to come in. Some of them will partner with existing oil companies; that is fine, too.

Question What kind of oil price do you assume for your growth projection? Can you achieve that growth for $70, you know, a barrel of oil?

DR. AHLUWALIA: Well, to be honest, that is something we need to do a little bit more hard work on because by the time you have done your sums the oil prospects change. The good news on that is if you had asked me this question maybe a year ago, relying on some of the work done in organizations like the World Bank and the IMF, you would have come to the conclusion that a $60-plus price of oil would seriously impact negatively on a year’s growth capacity. That hasn’t actually happened.In fact, one of the interesting findings is that despite high oil prices, most of which has been passed on, the growth of the economy has not been constrained. It could be – it could well be that, you know, there are huge opportunities for energy efficiency in the system. I mean, we, in all of our projects we assume declining energy intensity simply reflecting the fact that in terms of technology, we have not utilized fully the scope for energy saving equipment.

But I should – if you were to say to me what is the difference in growth between a $50 price of oil and a $70 price of oil. I don’t actually have a number which I could refer to because this is what our guys are trying to – trying to crank out. But I don’t think it would be more than half-a-percent. This essentially – I mean, this is based on the assumption that India has a lot of coal which it can exploit, where quite frankly the – I mean, we again – one of the things we are doing with the U.S. is having a series of energy working groups. Obviously the civil nuclear attracts the maximum amount of attention, but nobody seems to be aware of or even interested in the fact that we have a working group on oil and natural gas; we have a working group on coal. And those working groups are getting our people quite energized and exchanging ideas, a lot of which relates to technology, clean coal, energy efficiency, et cetera, et cetera. 

Question (Off mike.)

DR. AHLUWALIA: I don’t know on our side -- you’re referring to the nuclear?

DR. AHLUWALIA: I don’t know if on our side there is any problem at all. I mean, you know, there is always – in a democracy it is not – even if you think it is a good deal, it is not particularly sensible to say, ah, that is a good deal, wonderful. They are going to say all kinds of negative things. The previous government, which I know would have wanted much the same arrangement is publicly going to criticize it. They are going to say that India has unduly accepted too many restraints.But my feeling is that if the – if the administration is able to take it through Congress, which obviously we hope it will, and I know that that is not something we can predict, I don’t see that there will be difficulty on our side in implementing what we have agreed to. There will be political criticism but I think the government can handle that.

Question: (Off mike.)

DR. AHLUWALIA: I may be, maybe my colleagues can help in this, but as far as we are concerned, on the nuclear front, the action really rests here in getting it passed, taking it through the NSG. We are in fact engaged in discussions with the International Atomic Energy Agency to put in place the safeguards that have been agreed to. So in effect the timeframe would be determined essentially by action here.You know, there are no changes in India’s laws that are needed in order to implement the agreement. We have already done some of the things which were relevant for export controls and for, you know, disciplining any kind of proliferation, et cetera, et cetera. So from our point of view there is no legislative action that is needed.

Question: Is it true that there is a -- the U.S. has requested a nuclear test ban on India once this deal goes into effect; in that India would not -- that the U.S. does not want India to test any nuclear weapons after this goes into effect? Is that true?

DR. AHLUWALIA: I saw that in the newspapers. I am not handling the day-to-day stuff myself. But you know, I should mention that we have voluntarily announced the moratorium. So it’s not an issue in substance. I mean, the government of India has already said that it will not actually test at this stage. So I think what I saw in the newspapers was all a matter of whether it is appropriate to reiterate that and build it in.

Question: As far you’re concerned, that is not a stumbling block right now, as you understand it?

DR. AHLUWALIA: I can ask Mr. Mitra (ph); he is more up-to-date since I spent the last 26 hours – (inaudible) – in an airplane. But my understanding is that U.S. law, in any case, would interrupt any agreement we enter into – if we were to engage in another nuclear explosion. And we have quite categorically stated that we will not have another nuclear explosion. So I don’t see what the substantive difference is. Now I did see the newspaper articles and I don’t really know – I don’t know, Anoop , if that’s substantially correct? (Pause.) Yes?

Question There’s been a suggestion by at least some in Congress here that this deal somehow carves out an exemption to the Non-proliferation Treaty in terms of the test ban, in terms of the fast-breeder reactor and a couple other areas. You mentioned that the hurdles for this agreement are going to be probably deeper here than at home. I mean, what do you say to the critics here who are concerned that this deal undermines non-proliferation .

DR. AHLUWALIA: Okay, let me attempt an answer, but preface it by saying that I’m not the authorized, sort of, government of India spokesman on this, and there’s lot of subtle aspects here, which I may be missing – so I’ll ask Anoop to add any of those. 

You know, I fully understand the disconcern on the issue of non-proliferation. We’re not signitaries to the NPT, so as far as we’re concerned, we’re outside it anyway. The bottom line is we don’t believe that we , in any sense, remotely, credibly, could be regarded as a threat to the proliferation agenda. That’s a – in our view a very important agenda. And quite frankly -- I don’t again have full details on this -- but we’re very concerned at the amount of proliferation that has gone on under the umbrella of the NPT. So quite frankly – I mean, looking at it as an economist, I don’t see any great excitement in the world in trying to plug those leaks within the framework of the NPT as it stands. 

In our own region, I mean – we perceive negatively the consequence of unchecked, undisciplined proliferation, and that’s only a complaint about how the system works. So you can understand that from a political point of view, what India is really saying is that we want to be able to expand reliance on nuclear energy as a -- what is now generally regarded as a relatively clean source of fuel – if you take into account the fact that India has only two alternatives. Alternative one is it stops developing, which it’s definitely not going to do. And alternative two, since we don’t have that much oil, is that if we’re going to grow at eight percent and we have zillions of tons of coal, we just have to use more coal. And from our point of view – and we are aware that, you know, carbon emission is something, which – taking any kind of a long-term, sensible, holistic, responsible view, we ought to be trying to minimize – as much in our own interest, as in the world’s interest – the obvious answer therefore is nuclear energy. 

Now as far as we’re concerned, we’ve been doing research. We’re very open and in no way contradicting any of our obligations doing research on how to get more energy out of thorium. This is what – I’m now going to make a statement, which if you quiz me on I don’t understand the science behind, but what the scientists tell me is that we have a huge amount of thorium resources, and in the technology of being able to get to thorium- based nuclear fuel can be overcome. The technological problems can be overcome, which I think they will be. But we’re talking about 30, 40 years according to different estimates – then India could actually meet a phenomenal amount of its energy needs through the thorium-based route. Research is going on, on that. In-between that, I mean, we have a limitation on the amount of uranium we have, which pretty much limits how much we can get in terms of uranium-based nuclear fuel. And the present regime prevents us from bringing in uranium, even under safeguard, et cetera, et cetera. What we have – what we are arguing for is a regime that removes restrictions, under complete safeguard, allowing us to go into development of nuclear energy, based on imported uranium, imported technology, whatever – it doesn’t have to be imported technology, but the key issue is bring in uranium. And in the next 20 years, maybe 30 years, before the other stuff really becomes effective, this would add a tremendous source of non-polluting energy available to us. 

We’re hoping that – you know, I mean, we are – I mean, I wouldn’t want to underemphasize the importance of non-proliferation. I mean, it’s a matter of real importance to us. I hope that when this matter is discussed in the U.S., people will perceive that the agreement is an agreement that essentially allows India to exploit the possibility of nuclear fuel, and you have to keep in mind that India’s record is one where really concerns about non-proliferation should – concerns about proliferation don’t actually apply. That’s the issue.

Question:.. the proper safeguard in the deal if that’s what Congress wants here?

DR. AHLUWALIA: With all the new stuff that – we have agreed to a separation plan, and what we declared is this is the part of our program that is civilian and this is the part which is military. Earlier we didn’t do that. And it is in the civilian portion that, you know, bringing in imported uranium for energy, et cetera, would take place, and all of that would be safeguarded. So that’s not an issue at all.

Question: Could I ask very quickly a question about that deal in more broad terms? Senator Bayh and Senator Kerry, a couple of weeks ago in a hearing said that, we’ve got qualms about creating an India exception as far as proliferation policy, but this deal is of such strategic importance that we’ll probably go along with it in the Congress because it’s going to create a partnership, which is going to be very fundamental to U.S. relations in the 21st century. From India’s perspective, do you see in those – does India see this arrangement in those broad, strategic terms, or do you see it much more narrowly as an energy deal?

DR. AHLUWALIA: No. I think, I mean – clearly the economic aspect of it is obviously energy, but I think it has become emblematic, if you like, of a very fundamental transformation that is taking place. I mean, this – India-U.S. relations have been improving for quite some time – certainly after the collapse of the Soviet Union and the changed international perceptions. 

But there’s been a combination of how we see the world as democracies subject to terrorism. What is our worldview? As an open economy that’s globalizing, what is our interest vis-a-vis the U.S. economy, which is the lead economy in the world and a major source of technology? All these things have been on the agenda. For one reason or another, the willingness of the U.S. administration to make a basic change in the U.S. position on the civil nuclear agreement has been seen as emblematic of a total different approach to India. And it has – I think it would be fair to say -- and I don’t really want to be quoted on this because I’m not the spokesman, so this part of it should be off the record – I think there’s no doubt that this agreement going through politically in India will be seen as an affirmation that the United States sees India totally differently. Therefore, it will have – it is bound to have very positive spillovers in other areas where -- it’s not that either side has a different view, but you know, the way it generates momentum. The goodwill that this is going to earn for the U.S. as signaling a change is probably very large, and that’s the result of the history of it and how it’s built up. In other words, had it not been built up this way that would be a different factor. But it’s difficult to see how it would not be built up this way because after all, energy – I mean – it wasn’t built up this way just as a result of a random event. I mean, the fact of the matter is, if energy is as crucial as we now think it is, and if India can only use coal as the alternative, and if we’re worried about emissions, then from India’s point of view, this also is something of great importance. So I hope, therefore – I’m delighted actually to read the statements or the reference to the two statements by Senator Bayh and Senator Kerry.

Question: Sorry if – I was late and if I missed what your agenda is here, but are going to be having meetings on the Hill with anybody to talk about this?

DR. AHLUWALIA: No, actually. I’m not on the hill –

Question: Are we back on the record now?

DR. AHLUWALIA: I’m meeting –

Question: Are we back on the record -- are we back on the record now?

DR. AHLUWALIA: Yeah, we are back on the record now. I’m not sure what I said – should it be off the record? (Cross talk, laughter.) My point is that I’m not – (laughter) – the reason I’m saying this is simply that, you know, civil nuclear is being handled by a group of people on our side, and I’m not actually meeting any senators, so that portion of it is by way of background. Now who I am meeting on the Indo-U.S. side is really Sam Bodman, the secretary of Energy, later in the afternoon. We’re going to review progress on the entire range of energy cooperation. And we also have a civil nuclear energy group, which is looking at possible areas of research collaboration between India and the United States, which is independent of the civil nuclear deal. Obviously if that happens, it will hugely increase the possibility of collaboration. If it doesn’t happen, then we’ll be exchanging scientific papers with each other. But these are two different things, and I am going to be reviewing the cooperation in that area, but also cooperation in coal, cooperation in gas, cooperation in thermal efficiency, of power plants, and in non-conventional energy. In each of which we’ve set up a little group, they’ve met a couple of times, they worked out an agenda for cooperation, and we’re going to review what’s happened. 

The day after tomorrow, I meet with Al Hubbard to review the economic side, other than energy. President Bush’s visit, as we saw it, was a hugely successful affair. And it really laid out a very, very broad agenda of economic cooperation between India and the United States, which includes things like defense, it includes science, it includes these four energy areas, it includes economic areas, it includes a knowledge initiative in agriculture, which we think holds a lot of promise, for a kind of a second generation of cooperation between India and the United States, and also includes examining a set of recommendations that have been made by a group of Indian and American CEO’s. Ten of our chaps chosen by the Prime Minister, 10 U.S. CEOs chosen by the president – they’ve submitted a report, which is actually available on the website of the Ministry of External Affairs and also the Planning Commission.

Question: Are you meeting any of them this time?

DR. AHLUWALIA: I’m meeting – Bill Harrison is arranging a dinner on Monday in New York, where -- some of them will be there, so the CEOs I’m meeting in New York. But I’ll be meeting Al Hubbard, and he’s my counterpart on the economic dialogue. So that’s what’s happening.

Question: (Inaudible) -- intellectual property protection be one of the issues you’re discussing and improving and enforcing the laws?

DR. AHLUWALIA: Yeah, I think that is – that’s one of the – that’s an area of common interest. We have signed up, as you know, to fully meet our obligations under the TRIPS Agreement. We are concerned to improve enforcement and, in fact, my understanding is -- or the present perception is they’re quite happy with the law. Some people say you could go beyond; that’s not yet on the agenda. But we are concerned that whatever the law is should be properly and fully enforced. There is some cooperation between India and the U.S. on that. We have to do a lot of work on strengthening patent offices, et cetera – so it’s non-controversial.

DR. AHLUWALIA: Thanks a lot. Thank you.