The world you will enter is a different one from the one I walked into when I graduated. There was one aspect of the world of my youth that I treasure, an aspect I would greatly like to see restored: that somehow the society in which I lived and worked was more united, more naturally, unselfconsciously Indian than the one that is emerging today.
That all-permeating Indianness is still strong. My principal civil servants, for instance, come from four corners of India. One comes from Tamil Nadu, another from Kerala, one from Punjab and another from Gujarat; and they have all served India in their own ways. The India in which I grew up, earned my livelihood, brought up my children — this India has meant much to me. I have regarded all of it as my home, and I could not have been at home anywhere else.
But in some important respects, that India is being questioned, challenged. My own home state is rent by strife over its Indianness, a strife that fills me with great sadness. Competitive politics has raised caste and communal tensions to a dangerous level in several parts of our country. There is more parochiality in the governments. Politics is ceasing to be a vehicle of purposeful social change. Even industry finds its cosmopolitan character under threat of erosion. This is what I find most disturbing, even more for you than for myself. You have the future of this country in your hands; I would urge you to work to restore its Indianness, its instinctive unity.
There is another important respect which requires urgent national attention. I refer to the visible signs of erosion of national self-confidence and to the need for strong corrective action.
The sense of confident nationhood was the most palpable characteristic of the era of my youth. Our leaders Gandhi ji, Nehru, Patel had this confidence in great abundance; they had no doubts about the potential of this nation, or about its ability to look after itself. They were, in fact, allergic to dependence and its consequences to sycophancy on the one hand and truculence on the other. The one thing they tried to impart to the country was self- confidence and self-respect. Their influence is still strong, and their example would continue to inspire us to look the world in the face. But it must be admitted that of late there has been a weakening of this feeling of self-confidence.
A feeling has grown that somehow, we Indians are inferior to other nations, that we cannot compete against other countries in the global markets, that therefore we must build strong protective walls to insulate our economy from outside competition. I regard this feeling of lack of self-confidence a major barrier to the realisation of India’s immense development potential.
The leaders of our national struggle had faith in our nation, and the greatest homage we can pay them would be if we could restore the nation’s belief in itself not simply restore it, but revivify, rediscover, and redesign it. Let me illustrate what I mean by taking examples from the fields with which I know well.
Trade and industryTake, for instance, the area of trade. Industrialists in this country are blessed with many advantages that other countries do not enjoy. Our wage costs are very low. Our food prices are generally lower than elsewhere. We grow some of the world’s best cotton at extremely competitive costs. Our raw materials, where it is iron ore or coal or bauxite or bamboo, are available at throwaway prices.
But even with these advantages, the idea of our industry competing with industry abroad encounters resistance. Our import duties are amongst the highest in the world. We are trying to reduce them. We have reduced the peak duties to 110% in the last budget. With this, the duties on some products have fallen to the same level as the duties on their inputs. This appears to some of our industrialists as unreasonable. They argue that their products must bear a duty that is at least 20% higher than the duty on their components and raw materials. But if they made full use of the cheap labour and raw materials available in this country, it is not they but their competitors abroad that should need protection.
Excessive protection of industry and import substitution regardless of cost have created a pattern of industrialisation which generates few additional jobs. It has sheltered monopolies and accentuated disparities in income and wealth. Protection entails a subsidy given to the producer at the cost of the consumer. Heavy protection granted to industry has constituted massive discrimination against agriculture; no wonder that the disparities in living standards between rural and urban India have increased over time.
Industries and firms may be protected to correct inequalities in competition. If firms are new or small, they may deserve protection until they can compete on equal terms. But they should not become permanent infants. It is important not to equate protection with patriotism and trade with sin. Glorification of autarky can do our country enormous harm. India has a fairly diversified natural resource endowment but it has to be recognised that on a per capita basis we are not well endowed with natural resources. Thus, India has to become a major international trading nation if its development potential is to be realised in full measure.
With our manpower, with our natural resources, we can capture considerable share of markets in the world. We can be the world’s leading exporters of tropical goods, textile, steel and engineering goods. With larger exports, we can import materials from elsewhere and become competitive manufacturers of goods for which we do not have cheap inputs electronic goods, chemicals, wooden and metal handicrafts. Export activity would generate production and employment in our own country. We would not need to send our workers abroad to work under arduous conditions: they could make a gainful living in India itself. With a more dynamic economy, the graduates of our institutes of science and technology will not need to migrate to foreign lands in such large numbers.
Trade also has political implications. Japan and Germany are major world powers today, not because of powerful armies or lethal weapons, but because of their trade with the world. As the world prospers, they will inevitably prosper; on the other hand, they are so important to the world that the world cannot let them go down.
The world has a stake in a country in proportion to its international trade. Our share in world trade has declined from 3% in 1950 to half a per cent today. The result is that the world’s stake in our welfare and prosperity is minimal today.
Our country has been in serious economic trouble in the last two years. We have looked for help from outside. Irrespective of their political colour, irrespective of their nationalist postures at home, finance ministers have travelled abroad in search of support. Yet they got very little. The reason is not that the world is unduly hardhearted towards us, but that our importance to the world has diminished. Our place in the world is not measured by the size of our population or our arsenal, but by the goods and services we export and import. India sits astride the busiest trade lanes of the world. All the sea and air traffic between the east and the west passes along its seaways and airways. But little of it originates or ends in India. It is my hope that this trade will not simply pass us by, and that we shall take our rightful share of it.
But the world outside cannot be forced to take our goods and services; it must be coaxed to do so. We have to produce the goods the world wants, up to the quality standards that it demands, with the techniques it finds acceptable. This is where we need not only to have knowledge of the world, but to use it in ways it recognises. Our country has imported technologies on a considerable scale. We have sent thousands abroad to be trained. But if we want to learn at home how people work and produce abroad, it is also possible to do so by letting people from abroad come and show us; and one way to get a live demonstration is to invite them to set up enterprises in India.
The idea of foreign direct investment generates considerable heat in our country. It is evident that there are large corporations in the world, and that they can play a role in the foreign policies of their home countries. One should not be unmindful of the possibility that their interests may conflict with our national interests. But their power should not be exaggerated; nor should our ability to protect our interests be belittled.
Building self-reliance The East India Company had acquired control of a large part of east-west trade by means of a control of trade routes, ports, centres of production and markets. No multinational corporation of today comes close to acquiring that kind of control. Further, the government today has more means and more knowledge to regulate the activities of foreign enterprises in the national interest. This is what independence means; this is what independence should be used for not for cutting ourselves off from the global production system, but to interact with it for our own benefit.
And worldwide, direct investment is not a monopoly of large transnational corporations; more often, it is small knowledge-intensive firms that make the most difference. For instance, small Japanese firms driven out of production by rising wages have gone to Malaysia and made it the world’s biggest exporter of rubber gloves. Italian shoemakers looking for new opportunities have provided the backbone of the highly successful Brazilian shoe exports. Mysore and its surroundings today produce some of the finest silks. The most expensive garment in the world is the Japanese silk kimono. Why should not Japanese pattern makers come and make kimonos out of Mysore silk?
For trade, technology and investment are not the only things the world can give us; there is a world full of knowledge outside. There are books, journals that inform and educate and with the ad vent of electronic communications, new means of knowledge are arising. The creation of knowledge is a global process involving universities, research institutes, industries and inventors.
We too can participate in this Process with enormous benefit. or much of this knowledge is available at costs far lower than we would incur to produce it, and the value that can be produced by using that knowledge is a vast multiple of the cost of the knowledge It is short-sighted to try import substitution in knowledge at whatever cost. It can do considerable harm to our technological dynamism. It can cut India off from the community of nations where know ledge grows in an ordered framework. The successful absorption, assimilation and adaptation of available knowledge is a critical aspect of development It is a necessary precursor to the stage where we can ourselves generate new knowledge. India needs a strong research and development base to emerge as a front-ranking nation in the world We must spend more on research and development. Our scientists and technologists ought to be provided with facilities comparable to those available abroad. But R&D must have a proper focus. We ought to pay particular attention to areas which have hitherto been neglected, where we cannot depend on foreigners to generate new knowledge and where new knowledge can make a major contribution to the enhancement of India’s developmental potential and the improvement of living conditions of our masses.
So how are we to regain our self- confidence, to restore our self-reliance? Self-reliance should not mean self-defeating withdrawal and futile confrontation; it should mean thinking for oneself. An essential element in restoring the spirit of self-reliance must be to change the policy environment which gave sanctified withdrawal and glorified confrontation, and to open our country again to the winds of change. Self-confidence comes from practice, from successful adaptation to change; for adaptation, change has to be invited into our country.
This is what we have been engaged in doing in our recent policy initiatives. The intention behind the initiatives is not to betray our nation, nor to weaken its resolve for creative self-reliance. It is to broaden the arena for our productive forces, to bring the best out of them by raising the level of challenge, to make our resources more productive and to distribute the fruits of that productivity more equitably.
But practice is helped by example, and action by resolve. For this leadership our nation will look to you, to young men and women whom it has educated at much cost. I would invite you I would challenge you to look at the world with frank and confident eyes, and to translate the lessons it holds into a better life for our people.
