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Mr. Inder Kr. Gujral

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"Challenges of a Globalized World : Finding New Directions"

Key-note address by Mr.I.K. Gujral, former Prime Minister of India, at the seminar organised by the United Nations Information Centre, in New Delhi, on 16th September, 1999

Thanks very much for asking me to speak to you this afternoon. How do we look at the challenges of globalisation? With the background of our own experience and what we have witnessed in the neighbourhood, it should be possible for us to take a realistic view and work out a policy framework to suit our own needs. While doing so, we have to particularly keep in mind the Asian economic crises that has caused immense misery to such a wide areas where the masses got pushed downwards to experience hunger and malnutritions. The worst for them is not yet over, though signs of partial recovery are visible

While speaking in a UNDP-convened seminar in Korea last October, I had asked as to why this happened and that too in countries that had implemented full scale reforms. Convincing response was not available, though several pleas have been advanced. This afternoon we may benefit from various studies that have been made and judge their adequacy and relevance.

This is important for us in India since we will be soon making policies and plans for the next millennium. It is fortunate that the just released Third Report of the 'Human Development in South Asia 1999' is available. Read in context of the two preceding ones it may be possible for us to look at our policies in background of our experiences.

Before I refer to the Report, I wish to offer my hearty homage to the memory of that great son of South Asia, Mahbub ul Haq, who has left a legacy of courage to think. As we all know, the Human Developments reports were the children of his intellect and genius.

Permit me here to quote from the dedication page of the Report. I am sure you all will agree that "Mahbub ul Haq dreamt of a world free from inequity and injustice, and devoted his entire life to the pursuit of that dream. He challenged the conventional wisdom of his age and brought people to the centre stage of development dialogue".

I can imagine how difficult and emotionally torturous it must have been for Mrs.Mahbub ul Haq and her colleagues to complete the unfinished task. Let me offer, on behalf of all of us, my sense of admiration to the team led by her.

I had the privilege of enjoying Mr.Mahbub ul Haq's friendship. He had given me the opportunity of releasing the Second Report here in Delhi that was a few weeks prior to his death. The two Reports of 1997 & 98 had focussed on "the magnitude of human deprivation in the region. This year's Report focuses on the reasons behind such colossal human misery in a region that is rich in culture and tradition and has the potential for achieving much higher economic growth with social justice. The Report analyses the issue of governance in the region as it relates to people. How has governance - in all its dimensions, political, economic and civic - affected people's lives? What is the difference between good governance and humane governance? Do people in South Asia feel that their governments are responsive to their needs?"

I have said that this Report is South Asia focussed. It does not cover the entire world. All the same its importance is not diminished for this reason. The UNDP Reports, as we know, focus on the people, therefore, it is important for us to look at South Asia where such a large population lives. The 1999 report's "unique feature is the concept of humane governance that puts people at the centre of all governance policies, strategies, and actions. The basic precepts of the human development model are to improve the capabilities and expand the opportunities of all people, irrespective of class, caste, gender, and ethnicity".

The economic programmes and plans are made to serve the people and learn from the experiences to modify and change the directions where needed. Democratic societies, particularly must undertake this exercise periodically. The Report is emphatic in saying that promotion of human development "has to be not just pro-people or people-centred, it has to be owned by people".

We further notice in the Report that the governance in South Asian countries are falling short of the expectations. We have been provided indexes to judge the quality of governance. The Report will have served a very useful purpose if it receives the needed attention and makes us conscious that unless quality of administration is improved, all dreams of development will get frustrated causing a widely spread dismay.

The Report "paints a broad picture of (prevailing state of) human development, particularly in the aftermaths of the natural disasters and also nuclear tests". In its light chapters, the Report presents a picture that would help us to "assess the social costs of poor governance, including the deteriorating law and order situation in the region. It explores the many initiatives people are taking to improve civic governance. And finally, the Report proposes an agenda that identifies the most pressing policy and institutional changes required highlighting key governance areas crucial to the securing human development, the reform agenda is focussed on redirecting the priorities of the state, revitalising state institutions, and building new alliances with civil society".

There are several quotable quotes in the Report which I want to share with you:

  • South Asia has emerged by now as one of the most poorly governed regions in the world, with exclusion of the voiceless majority, unstable political regimes and poor economic management. The systems of governance have become unresponsive and irrelevant to the needs and concerns of people.
  • The South Asian states have fallen back on their most essential tasks even though their involvement in the socio-economic lives of the people remains pervasive. The most basic public goods do not get delivered: sound macro-economic management basic social services, and internal order. When institutions are weak, individuals become powerful creating opportunities for rent-seeking and illegal extortion.
  • South Asia's crisis of governance stems from systemic political, economic and social challenges embedded in the region's colonial and feudal past. A new vision and architecture of humane governance, built upon the principles of ownership, decency and accountability, have become imperative for the over one billion citizens of South Asia.
  • South Asian states need to redirect their priorities towards the core human development concerns."

It may be pertinent for me to quote Mahbub ul Haq once again in the midst of the prevailing atmosphere of jingoistic rhetoric. He says, "Human security is not a concern with weapons. It is a concern with human dignity. In the last analysis, it is a child who did not die, a disease that did not spread, an ethnic tension that did not explode, a dissident who was not silenced, a human spirit that was not crushed."

I share the Report's belief that absence of gender equality and opportunities needed for girls and women in our societies are causing serious impediments. Since "the most glaring levels of poverty of opportunity in South Asia are found among women and girl children".

As I said a while ago, the UNDP-convened conference in Seoul had concluded that all globalization programmes must have a local flare. In this context, it is important to go with the Report when it says, "Trade liberalization is good for an economy. However, financial liberalization should only be undertaken cautiously and after proper sequencing.

If 'hot flows' of capital are to be allowed, they should be monitored carefully and managed properly. As demonstrated by the Tequila and East Asian experiences, rapidly expanding short-term debt financed by 'hot flows' can hard domestic economies.

The exchange rate system followed, whether fixed or flexible, should reflect the economic fundamentals of the country.

Transparency, absence of politicization and prudential regulation must exist in the financial sector.

Proper data reporting is a must - if only to accurately assess the financial state of an economy.

Industrialization should be diversified, decentralized and rural oriented, not urban concentrated.

An active and free domestic media is a necessity. More realistic picture of an economy can only of benefit to all parties, whether domestic or foreign. If the media highlights deficiencies in a national economy, it should be viewed not as a threat, but as an opportunity to correct mistakes and weaknesses".

It is important for us to learn that despite the temporary liquidity crisis in East Asia, economic fundamentals remain strong. And that is why they are in a position to bounce back speedily. They are succeeding because of their emphasis on primary education. Liberal investment in basic education marks the critical difference between South Asia and East Asia. Estimates indicate that primary education has the highest social rate of return, followed by secondary education. Primary education is the most important component in East Asia's rapid growth over the last three decades. South Asia's destiny will similarly determine by its ability to expand basic education.

May I point out from the Report to say that "land and credit reforms were probably the most important institutional factors behind East Asia's high growth. South Asia cannot break the shackles of poverty and destitution without instituting meaningful reforms in these sectors. The high rates of saving in East Asia (35 per cent in 1996) compared to those of South Asia (14 per cent in 1996) were made possible by high growth, a progressive taxation policy, and a fall in the dependency ratio. At the same time, there was an emphasis on investment in infrastructure. Many studies have indicated that such public investments promote private investment, especially in export-oriented manufacturing activities".

There is "another ingredient in the East Asian miracle and that was the healthy nexus between the state, bureaucracy, and big business. This was an important element in devising high growth strategies. South Asian economies remain dominated by inefficient public sectors corporations, and inefficient bureaucracies".

These are the challenges that confront us. Even a rushed view of the prevailing social and economic environment should persuade us to believe that it is a demanding agenda that seeks courage to revise the attitudes and institutions. Societies and social environments are asking for a wholesale change that seek courageous leadership that must be provided by the civil society and the political set-up.

Thank you.

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Bio-Profile :
Mr. Inder Kr. Gujral

Bio-Profile :
Mrs. Shiela Gujral

Excerpts from the book "A Foreign Policy for India"

Selected Speeches

Latest Articles