Address by Hon’ble Minister of State for External Affairs, Shri Shashi Tharoor
June 30, 2009
Hon. Minister Shri Murli Deora (to whom I could not say no even when he was not yet a Minister), Hon. Minister of State Jitin Prasada, Dr. Omkar Goswami (whose grey hair betrays the greater wisdom he has acquired since we first met in college in 1976), IOC Chairman Sarthak Behuria, Secretary R.S. Pandey, Shri V.C. Agrawal, Excellencies (if any are still left),
Ladies and Gentlemen,
Friends,
It gives me great pleasure to be with you this evening on the occasion of the Golden Jubilee of the Indian Oil Corporation. Since we have heard so many significant words of praise and congratulation already on this occasion, I will not burden you with more except to join in my own appreciation of IOC’s contributions to our country, and its performance for 50 years in such a vital sector of India’s economy.
2. Having listened with interest to my old friend Omkar Goswami, I shall attempt instead to speak as a generalist — an author and former columnist rather than a minister — about India’s ongoing and incomplete transformation, not focusing on oil and gas (which everyone else on the podium knows more about than me) but taking a broader view of the place of India in the global economy.
3. As an Indian, I strongly believe that our country’s development will have a significant impact on the global system, and on the world’s sense of where international economic and political power may shift in the decades to come. In fact, according to the experts at Goldman Sachs, India, if it were prepared to pursue economic reform more vigorously, could even overtake the US economy by 2050. We are, of course, talking in gross terms here – no one expects the average Indian’s lifestyle to be better than the average American’s in 2050, since there will be four times as many Indians as Americans in the world at that time. But the very idea of overtaking the US’ GDP is mind-boggling, I’m sure, to many of us in this room. And yet that is where my input has to be recorded.
4. This kind of analysis assumes, of course, that recent rates of GDP growth are sustained by India for the next four decades – and we know that recent events suggest that that is an unduly optimistic assumption. Yet, the underlying positives do not make Goldman’s prediction such a foolhardy one. After all, India has multiplied its per capita income levels many times over since 1950, and has done so far faster in recent years than Britain or the US did during and after the industrial revolution. The idea that India could triple its current economy in the next fifteen to twenty years is not implausible to many economists, not even to the World Bank, if their annual assessment of Global Economic Prospects is any guide. Now I am not an economist unlike Omkar, but I have always been profoundly skeptical of those who issue forecasts of any sort; I’ve learned over the years the future is never quite what it used to be. But few will disagree that India is going to be richer than it is now, both in absolute terms and in relative ones.
5. Now, though economic reforms are here to stay, politics has of course remained a significant impediment, since reforms have been pursued over the years with the hesitancy of Governments looking constantly over their electoral shoulders. Today India’s economic reforms remind me of the old joke I first heard from a retired Indian Ambassador three decades ago about Indian diplomacy: he said that Indian diplomacy was like the love-making of an elephant – it was conducted a very high level, accompanied by much bellowing, and the results are not known for two years. That is no longer true of Indian diplomacy, I’m happy to say, but for some time it has seemed to be true of many Indian economic reforms, which were promulgated from on high with much fanfare and then took an age to be implemented because of all the vested interests and obstacles that had to be overcome. But we all know that economic liberalization in a globalizing world has changed India irreversibly, and that the present government is determined to accelerate the pace of the country’s transformation in the coming months and years.
6. Now I realise my elephant joke didn’t go over so well, but it’s just as well that I evoked the elephant, since my most recent book, now nearly two years old, is called The Elephant, the Tiger and the Cellphone. It is about the transformation of India, and two-thirds of the title is perhaps self-explanatory; I begin the book with a Panchatantra-type animal fable about India as a lumbering, slumbering, ponderous elephant, mired in its own dust and mud, covered in flies, slow to move, slow to change, which in recent years has appeared to be acquiring the stripes of an agile, lithe and sinewy tiger. But then where does the cellphone come in, you might well ask. Well, to me the cellphone is the instrument that most epitomizes this change. Like so many in this room, I grew up in an India in which telephones were both rare and virtually useless. When I left India in 1975 to go abroad for graduate studies, we had perhaps 600 million residents in the country and just two million land-line telephones. But having a telephone was a rare privilege: if you weren’t an important government official, or a doctor, or a journalist, or Murli Deora, you might languish in a long waiting-list and never receive a phone. Members of Parliament had amongst their privileges the right to allocate 15 telephone connections to whomever they deemed worthy. And if you did have a phone, it wasn’t necessarily a blessing.
I spent my high school years in Calcutta, and I remember that the phone sat then in the front hall. If you picked up your phone, you had no guarantee you would get a dial tone; if you got a dial tone and dialled a number, you had no guarantee you would reach the number you had dialled. In fact it was a common feeling that “wrong” number was a very common term then. Sometimes you were connected to someone else’s ongoing conversation, and they had no idea you were able to hear them; there was even a technical term for it, the “cross-connection” (these were connections that made us very cross). If you wanted to call another city, say Delhi, you had to book a “trunk call” and then sit by the telephone all day waiting for it to come through; or you could pay eight times the going rate for a “lightning call” which only took half an hour instead of the usual three or four or more to be connected. As late as 1984, when a member of Parliament rose to protest this woeful, appalling performance by a public sector monopoly, our then Communications Minister – I’m glad the present one isn’t here – replied in a lordly manner that in a developing country, telephones were a luxury, not a right; that the government had no obligation to provide better service; and that if the honourable member was not satisfied with his telephone, he was welcome to return it, since there was an eight-year waiting list for this inadequate instrument!
Jitin, I’d be listening for future tips!
7. Now fast-forward to today. When I finished writing my book, I was able to report in it that in April 2007 India had just set a new world record by selling 7 million cellphones that month, more telephone connections than any country had ever done in one month. Well, the book went off to the press, got printed and bound and arrived in your bookstores, and that figure was already out of date – because in each of the last three months of 2007, India beat its own world record, so when my book hit the stands in December 2007, India sold 8.3 million cellphones. The trend continued in 2008 – we crossed 9 million in July and 10 million in October – and now in 2009 India has sold 15 million phones in each of the last three months. So today in one month India sells more than seven times as many phones as the entire country possessed three decades ago.
8. But even more important is the issue of who carries these cellphones in today’s India. Most of you in this room are going to be chauffeur-driven when you leave this evening, and of course your driver carries a cellphone. If you live in any of our Delhi suburbs, you are familiar with our istri wallah on the side-streets: a man with a wooden cart that looks like it was designed in the 16th century, using a coal-fired steam iron invented in the 17th century to iron clothes from the neighbourhood; but you know in these changing times, he has a 21st century mobile phone, to know which apartment has clothes needing his services. Recently, I visited the country farm of a friend in Kerala. He asked if I wanted fresh coconut water; I said of course, and he pulled out his cellphone and dialled the local toddy tapper. A voice replied “I’m here”; we looked up, and there he was, on top of the nearest coconut tree, with his lungi tied up at his knees, a hatchet in one hand and a cellphone in the other was the toddy. Fishermen take cellphones out to sea to call the market towns on the coast on the way back to shore to see where they can get the best prices for their catch. Farmers who used to have to send an able-bodied relative on a gruelling walk to town to find out whether the market was open, whether their harvest could be sold and at what price, before walking back to the village to load their carts, now save half a day’s time and labour with a two-minute call on a cellphone. The cellphone has empowered the Indian underclass in ways in which 45 years of talk about socialism singularly had failed to do.
9. Why is it worthwhile today to recall all this? The reason is simple. Last year’s convulsions in the international financial markets have provoked an unseemly amount of gloating on the part of some in our country. Some have even claimed to be right in opposing liberalization all along. CPM politicians have been arguing that it was their obstructionism that saved India from de-regulating itself into disaster.
10. Well they are wrong. And it’s important to say so before too many people in our political classes find themselves persuaded by this lapse into historical amnesia.
11. See the debate between capitalist globalization and self-reliance is hardly new, but a few months ago one would have been justified in assuming that it had definitively been resolved. Yet we can’t forget that in India it had required a huge paradigm shift. Whereas, in the West, most people axiomatically associate capitalism with freedom, India is nationalists associated capitalism with slavery — because the British East India Company had come to trade and stayed on to rule. So, our nationalist leaders were naturally suspicious of every foreigner with a briefcase, seeing him as the thin edge of a neo-imperial wedge. Instead of integrating India into the global capitalist system, as only very few developing countries like Singapore were so effectively to do, India’s leaders were convinced that the political independence they had fought for could only be guaranteed through economic independence. And that’s why self-reliance became the slogan, the protectionist barriers went up, and India spent 45 years with bureaucrats rather than businessmen on the “commanding heights” of our economy, wasting, some would argue, the first four and a half decades after independence in subsidizing unproductivity, regulating stagnation and trying to distribute poverty. This only goes to prove of course that one of the lessons you learn from history is that history can sometimes teach you the wrong lessons. We suffered from the economics of nationalism. It would be tragic if recent events in the world of finance led us to learn the wrong lessons again.
12. The reactionaries today seem quickly to forget that it took a humiliating financial crisis in 1991 (a crisis in which the nation had to physically ship its gold reserves to London as collateral for an IMF loan) to prompt our country to change course. And change course we did, for the better. A measure of the extent to which the globalization debate had turned came for me last year in Kolkata when I spoke alongside the CPM Chief Minister of West Bengal, Buddhadev Bhattacharya, who declared and quote: “some people say globalization is bad for the poor and must be resisted. I tell them that is not possible. And” – then he added this is the crucial part—“even if it were possible, it would not be desirable.” When a Communist Chief Minister speaks that way about global capitalism, one could argue that that debate is largely over.
13. For decades, the theory of development economics had suffered from two intertwined historical circumstances – the experience of the Great Depression in the 1930s, when only robust government intervention saved a number of economies, and the fight for freedom from colonial rule, which of course involved the overthrow of both foreign rulers and foreign capitalists. The development gurus firmly believed in the wisdom of top-down rule and government planning by all-knowing, all-seeing economists, of whom India suffered from a superabundance. Our rulers, in turn, mistrusted what ordinary people could achieve for themselves when they were freed to pursue their own prosperity within a framework of government-supported structures that ensured a level playing field, fair regulation and social justice (the model that came to be adopted in the Western democracies that has come to be adopted in India, though increasingly dismantled in Republican-ruled America). Instead they created a license-permit-quota raj that denied Indian businesses the opportunity to prosper and grow.
14. The result was what was derisively called the “Hindu rate of growth”, at which India chugged along at 3 percent while much of the rest of Asia shot ahead. It is sadly impossible to quantify the economic losses inflicted on our country over decades of entrepreneurs frittering away their energies in queuing for licenses rather than manufacturing products, in paying bribes instead of hiring workers, in wooing politicians instead of understanding consumers, and in “getting things done” through bureaucrats rather than doing things for themselves. The country has changed for the better, as epitomized by the strength of the Indian Oil Corporation, a public sector giant that is now listed on the stock exchange and is an illustrious member of the Fortune 500.
15. Economic reform has worked in India. In the last 15 years, India has pulled more people out of poverty than in the previous 45 – averaging some 10 million people a year in the last decade. The country has visibly prospered, and despite population growth, per capita income has grown faster and higher in each of these years than ever before. In the current recent financial crisis, far from prompting us to retreat, should be an opportunity to safeguard those gains and to build on them.
16. And yet there’s a long way to go. It has become a cliché to speak of India as a land of paradoxes. The old joke about our country is that anything you say about India, the opposite is also true. We like to think of ourselves as an ancient civilization but we are also a young republic; our IT experts stride confidently into the 21st century but much of our population seems to live in each of the other twenty centuries. Our teeming cities overflow while two out of three Indians still scratch a living from the soil. We have been recognized, for all practical purposes, as a leading nuclear power, but 600 million of our billion citizens still have no access to electricity and there are daily power cuts even in our nation’s capital. India holds the world record for the number of cellphones sold (as I said), but also for the number of farmer suicides (someone estimated 17,000 last year, because when harvests fail, farmers are crushed by a crippling mountain of debt and feel the only way out is to take their own lives).
17. We have 24 dollar billionaires down from 58 the previous year, and we also have 260 million people living below the poverty line. And it’s not the UN/ World Bank’s poverty line of $1 a day, now revised to $1.25 that is Rs. 75 a day, but the Indian poverty line, which in the rural areas is 360 rupees a month, or 12 rupees a day – in other words, a line that’s been drawn just this side of the funeral pyre. As a newly-elected politician, let me stress especially to Omkar, that it is impossible not to be conscious of the fact that every single one of us represents a majority of poor people, since over 70% of Indians live below that World Bank global poverty line, and in making policy we have to be responsive to their needs.
18. So India’s challenges are enormous. Our growth was never only about per capita income figures. It was always a means to an end. And the ends we cared about were the uplift of the weakest sections of our society, the expansion of employment possibilities for them, the provision of decent health care and clean drinking water. Those ends remain. Whether we grow by 9%, as we once did, or by just over 6%, as we did last year, our fundamental commitment must still be to the bottom 25% of our society.
19. But there are plus points that all of us need to bear in mind. The Indian private sector is efficient and entrepreneurial, and is compensating for the inadequacies of the state. India is good at the art of channelling domestic savings into productive investments, which is why we’ve relied so much less on foreign direct investment, and is even exporting FDI to OECD countries. In other words, India’s entrepreneurial capital and management skills which we also are at work in some public sector companies like IOC, are well able to control and manage assets in the sophisticated financial markets of the developed West. As for our financial system, we suffer from very few of the creative and risky derivative instruments that have caused such problems in the West – hardly any subprime loans and credit-default swaps and so on – and so our banks aren’t affected in the same way as Western banks. India has the basic systems it needs to operate a 21st century economy in an open and globalizing world.
20. Obviously, the terrorist attacks of late November complicate this story. The terrorists knew exactly what they were doing. Theirs was an attack on India’s financial nerve-centre and commercial capital, a city emblematic of the country’s energetic thrust into the 21st century. They struck deliberately at symbols of the prosperity that was making the Indian model so attractive to the globalizing world. They dented for a while the worldwide image of India as an emerging economic giant, a success story of the era of globalization and an increasing magnet for investors and tourists. Instead the world was made to see an insecure and vulnerable India, a seemingly “soft state” bedevilled by enemies who could wound it with impunity. And by striking hotels favoured by foreign businessmen and investors, they undermined the confidence of those whom India needs to sustain its success story. Indeed, the flurry of cancellations initially reported by every Indian hotel in the wake of the Mumbai horrors suggest that some who were contemplating investing in our country were, for a while, frightened away. Terror has added to the time India has needed to recover from the economic crisis.
21. Equally, our own response to the terror will have an impact on our economy. That is one more reason why our government paid no heed to the hotheads on television channels who were clamouring for military action, since as our neighbours well know, the world will not invest in a war zone. Most observers have applauded the government’s calm and measured reaction, which has been careful not to play into the hands of the terrorists while sustaining international pressure on Pakistan to act against those who have unleashed terror on our country from their soil. A policy that remains calm, measured, focused and persistent but strong will obtain results.
22. All this, I hope, provides some context for the world in which the Indian Oil Corporation will function in its sixth decade. We can say with some confidence that in the intermediate and long term, India will continue to prosper and pull more millions out of poverty than we have ever done; that we will compete effectively with Western corporations for business, purchase foreign companies and assets, expand our trade and overseas investments, invent and develop new technologies, and displace more economic weight around the world. In other words, there’s a lot to look forward to.
23. But to play a major role in the 21st century – to fulfill our undoubted potential — India also needs to solve its internal problems. We must ensure that we do enough to keep our people healthy, well-fed, and secure — secure not just from jihadi terrorism, a real threat, but from the daily terror of poverty, hunger and ill-health. Progress is being made: we can take satisfaction from India’s success in carrying out three kinds of revolutions in feeding our people as our President has mentioned – the “green revolution” in food grains, the “white revolution” in milk production and, at now there’s a new one, a “blue revolution” in the development of our fisheries. But the benefits of these revolutions have not yet reached the third of our population still living below the poverty line.
24. Now I have written in my books of the many problems the country faces, the poor quality of much of its political leadership, and other parties hasten to add, the rampant corruption, the criminalization of politics. And yet — corruption is being tackled by an activist judiciary and by energetic investigative agencies that have not hesitated to indict the most powerful politicians. (If only the rate of convictions matched the rate of indictments, it might be even better…) The rule of law remains a vital Indian strength. Nongovernmental organizations actively defend human rights, promoting environmentalism, fighting injustice. The press, the media is free, lively, irreverent, disdainful of sacred cows.
25. I believe that the India of tomorrow is one open to the contention of ideas and interests within it, unafraid of the prowess or the products of the outside world, wedded to the democratic pluralism that is India’s greatest strength, and determined to liberate and fulfill the creative energies of our people. That is the transformed India of the early 21st century, and its place in today’s world is well worth looking forward to.
26. Congratulations once again to the Indian Oil Corporation for its vital and continuing role in this transformation, and thank you very much. Jai Hind!