From: krishna@iss.nus.sg (Krishnamoorthy Subrahmanyam)
Newsgroups: soc.culture.indian
Subject: India: Question of self-confidence / Dr.Manmohan Singh
Date: 10 Apr 92 07:44:50 GMT
Organization: Institute of Systems Science, NUS, Singapore
Originator: krishna@suliman

It is 200 lines of 80 column article. It is quite interesting to know the view
points from one another mahanubavudu, from Bharath.

...Krishnamoorthy.

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                       India: Question of self-confidence
                                     
                              By Dr. Manmohan Singh


( The article is excerpted from the finance minister's convocation address to
  Mysore University delivered on March 29, 1992, and published in 
  Hindustan Times,  New Delhi, April 3 1992.)


  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 greately like to see restored: that somehow the society in which
I lived and worked was more united, more naturally, unselfconsciously India than
the once 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 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 that fills me with great sadness. Competitiv
politics has raised caste and communal tensions to a dangerous level in several
parts of our country. There is more parochiality in the Government. 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 - Ghandhiji, Nehru, Patel - had this confidence in
great abundance; they had no doubts about its ability to look after itself. They
were, in fact, allergic to dependence and its consequences - to sycophancy 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 something 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.

  Take, for instance, the area of trade. Industrialists in the country are 
blessed with many advantages that other countries donot enjoy. Our wage costs
are very low. Our food prices are generally lower that 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 tham. We have reduced peak duties
to 110 percent 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 percent higher that 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 permanant infants. It is important 
not to equate protection with patriotism and trade with sin. Glorification of
autarky can do our country enormous harm. India fas 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 became 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 three percent in
1950 to half a percent 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 posture 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 aresenal, 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 possiblity that thier interests may conflict with our
national interests. But their power should not be exaggerated; nor should our
ability to protect our interests be belittled.

  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 advent 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. For 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 that knowledge is a vast multiple of the
cost of the knowledge. Is is shortsighted to try import substitution in 
knowledge at whatever cost. It can do cosiderable harm to our technological 
dynamism. It can cut India off from the community of nations where knowledge 
grows in 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 knwoledge
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 - to look at the world with frank
and confident eyes, and to translate the lessons it holds into a better life for
our people.
        
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Organization: Physics, Carnegie Mellon, Pittsburgh, PA