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Mr. Inder Kr. Gujral

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Mrs. Shiela Gujral

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"INDIA AND ASIA IN THE NEW MILLENNIUM"

LECTURE BY MR.I.K. GUJRAL,FORMER PRIME MINISTER OF INDIA AT THE SEOUL NATIONAL UNIVERSITY, KOREA AT 1000 HRS ON SATURDAY, 31st OCTOBER, 1998

Mr.President,

Ladies and gentlemen;

A little over fifty years ago, standing on the threshold of freedom and contemplating the retreat of colonialism, India’s leaders had foreseen the advent of the Asian renaissance. Prime Minister Jawaharlal Nehru conveyed the excitement and euphoria of the times in his address to the Asian Relations Conference in New Delhi, in these prophetic words: "There are powerful, creative impulses and a new vitality in all the people of Asia. The masses are awake and they demand their heritage. Strong winds are blowing all over Asia. Let us not be afraid of them but rather welcome them for only with their help can we build the new Asia of our dreams. Let us keep faith in these great new forces and dream which is taking shape. Let us above all have faith in the human spirit that Asia has symbolized for these long years past."

The Asian dream is today endangered. Over the past sixteen months, Asia’s endurance has been tested as she has undergone the severest economic recession of her post-war economic history. Till recently, Asia was seen as the greatest economic success story of all times, for which she was envied and admired around the world. But an economic typhoon hit this region without warning in June 1997, causing untold damage, and calling into question the future direction and destiny of Asia.

The crisis today is nearly a year and a half old. Thailand was the first to catch the flu, when in June 1997 its foreign exchange reserves evaporated, forcing the authorities to abolish the dollar - Baht peg. Till this point of time, Thailand had been the fastest growing economy in the world, with average growth rates in excess of 8% per annum for most the previous decade. This year, in 1998, the Thai economy is expected to display negative growth of 8%. This unprecedented swing, from enjoying the worlds most rapid economic growth to suffering one of the worst rates of contraction, illustrates the dramatic reversal of fortune which to varying degree Asia as a whole has suffered.

Korea too is admired around the world for its stunning economic performance which saw a hungry, war ravaged nation transform itself, in little over a generation, into a full fledged industrialized state. Few of us could believe that South Korea, just recently admitted into the OECD, with its huge GDP of US$ 480 billion, and matching foreign exchange reserves, would be vulnerable to any such economic decline. But the force of the economic typhoon was such that in the closing months of 1997 the Korean Government, unable to fully roll over it short-term obligations and fend off attacks against the currency, the Won, found itself with no option other than becoming a ward of the IMF.

After striking Korea, the virus spread to East and South-East Asia with Indonesia, Malaysia, Hong Kong and the Phillipines most severely affected, by an unstoppable, domino like collapse. The Indonesian economy is likely to contract by 16% this year - this is an unprecedented economic meltdown and one which will inevitably leave deep and unhappy scars on Indonesia’s socio-economic fabric. It is only now, late in 1998, that the first welcome signs of stabilization on Asia’s economic front are seen, but even so, no significant economic recovery is visualized until the latter half of 1999.

The crisis of 1997 - 1998 is most starkly symbolized by the re-emergence of the first visible signs of hunger and malnutrition seen in Asia after a long time. One of the proudest of Asia’s achievements was the Green revolution that had abolished food shortages from all but the poorest and least developed of Asia’s regions. This year, however, pictures of gaunt and hungry faces rummaging through rubbish heaps, foraging for food have emerged even from middle income countries such as North Korea and Indonesia. The prospect of Asia leading the world into the new millennium has given way to talk of an Asia led, worldwide economic depression.

The crisis has caused experts to doubt the very existence of an Asian economic ‘miracle’. Leading economists such as Paul Krugman have argued that the miracle is more of a myth since, going by their analysis, economic growth in Asia has not been the result of efficiency and innovation in the production process, but has instead depended on the heavy application of land, labour and capital resources. Such a growth process - which is similar in some respects to that followed by socialist economies - is subject to diminishing returns and is thus inherently self limiting. The implication, if this hypothes is correct, is that Asia’s economic achievements are no more durable and lasting than the achievements of the erstwhile socialist states of East Europe and Central Asia, most of whom today are in the deepest depths of economic ruin.

Today, we are hearing that Asia’s banks and businesses are corrupt, that its firms are over-extended, its foreign debt unmanageable and both workers and managers lack innovation or inventive skills. Without whole scale reforms aimed at transforming Asian society into mirror image of western society, these defects are irremediable and Asian economy beyond the pale of rescue. What I find most disturbing is that the downturn and the pessimism that it has generated has caused many in Asia to lost faith in themselves. In the panic of moment, there is a stampede to sell off national assets and blindly embrace the standard, cure all prescriptions on offer by the world’s multilateral financing institutions. Policies and principles which have served Asia well so far are being discarded in a rush to adhere to the orthodoxy of the financial institutions, at a time when the prescriptions of these institutions is the subject of increasing debate and criticism in Western academic circles. Jeffrey Sachs and others have consistently argued that the policies mechanically prescribed by the multilateral lending agencies in the face of this crisis have unduly favoured the lenders, while worsening the economic difficulties facing the borrower nations.

Is the Asian miracle a myth? The answer, as the test of time will doubtless confirm, is a firm NO. In Asia, during the course of the past fifty years, millions have been lifted from the very edge of subsistence and hunger to the secure prosperity of the middle class. In India, at a conservative estimate, roughly 200 million people have been added to the ranks of the middle class since our Independence in 1947. If we add up the totals for all of Asia, we will find that well over a billion people have made this fundamental transition in their economic and social standing.

The growth of Asia has not followed the state directed model of heroic plans, giant steel mills and sprawling state farms - it is story for the most part of education, of entrepreneurial skills, the development of talents, the learning of professions. Asian economics, in short is a story of the self-directed human being successfully lifting himself through the dint of his own efforts. Like all enduring stories, it is ultimately a story of human self realization.

Our continent today is suffering from a temporary economic contraction, not from economic marginalization or irrelevance. Asia is no longer a sweat shop, producing inexpensive shoes and garments for price conscious western consumers. We are no longer in the commodities business - Asia today is capable of producing the very best in everything ranging from cars and software programmers to satellites and computer chips and supplying them to the highest standards demanded by the world market. Wherever in the world Asians travel and live they exemplify the highest standards of education, culture and achievement and serve as successful role models for the host society. The character and the temperament that has earned them this success has in no manner been dented or weakened on account of the present crisis.

The Asia of the late 20th and early 21st century has many strengths - strengths that are specific to her and the foundation of her greatness. Whenever doubts assail us, we should remind ourselves and take heart from these strengths.

Firstly, Asia has the benefit of an egalitarian social structure. Egalitarianism, like freedom, has always been a potent force for human improvement. History shows how every great society has also been, at heart, an egalitarian society. And conversely, no society that is not egalitarian has ever conquered any pinnacle of achievement or standing. In my own country, India, regions afflicted with serious caste and social divisions have lagged economically, whereas regions in which such social stratification is muted have taken off. Egalitarianism is one of Asia’s great strengths, leading to social cohesion, and the team spirit that teaches ‘All for one and for all’. A natural inclination towards education, learning, industriousness, enterprise and family values - these are Asia’s strengths and the foundation of its prosperity. Asia does not have to recreate itself in the image of the West to secure its future, it has merely to be more like itself.

It is for these reasons that I am bullish on Asia. Only if Asians begin to lose faith in themselves will this crisis have caused any permanent damage. A situation that appears full of hardship in the immediate, short-term perspective can be turned to long-term advantage if the right lessons are learnt and applied from it. In the Chinese language, the word for crisis and the word for opportunity are the one and the same, and there is good reason for this. All adversity can be utilized for introspection, for self-criticism so that we can remedy and reinvigorate ourselves to cope successfully with the fresh challenges and great opportunities that lie ahead.

It is in this spirit that I say that we must begin to admit changes that will strengthen our societies for the future. Greater democratization is one of them. India, as you know, is Asia’s oldest and largest democracy and as true democrats we do not believe in the forcible export of democracy, nor do we believe that there can be only one system or model of democracy. That being said, the unfortunate fact is that many Asian societies have been disfigured by the authoritarianism of its rulers. The larger lesson from history is that a country is as great as its systems and processes and that individual brilliance counts for little in the making of nations - it is teamwork that really matter. All powerful rulers and great nations do not generally co-exist, usually one can survive only at the cost of the other. Strengthening the Rule of Law, building institutions and jealously guarding the best of our traditions must be the foremost priority of those concerned with Asia’s welfare.

Greater democratization must also mean being more tolerant of dissent. Shutting the door to dissent is foolhardiness for it amounts to closing one of the main avenues of innovation and improvement. When the astronomer Galileo said that the world was round, and that it was the earth that circles the sun, he was overturning the received wisdom of his time. Galileo’s arguments enraged both Church and State, and he was persecuted as a heretic. If the orthodoxy had prevailed, we would still be believing that the world was flat and that it was the sun that circled around the earth. This is not exactly a recipe for great socio- economic progress, and the tendency to close our minds to new ideas and hard truths is a failing that we in Asia must constantly be on guard against.

Finally, we must not lose sight of the ethical and moral aspect of development. The present economic crisis has forced many Asian countries to abandon long held national priorities and policies in order to blindly follow the orthodoxy handed down by the lending institutions. The Asian crisis, following upon the collapse of communism, has reinforced the perception that there is only one path of successful economic development which is the western liberal model as prescribed by the neo-classical theoreticians of the Chicago school. I, for one, do not subscribe to this orthodoxy - to my mind, it is one that is negated by the larger sweep of human history.

There is never just one path to salvation. Even in economies there are alternatives. We have on the one hand what one may call the Christian capitalism of caring, of compassion, of concern; this is quite different from the predatory capitalism of extortion, of exploitation, of expropriation. It is capitalism, in this predatory avtar that most Third world countries have been exposed to for centuries and we have seen that it leads nowhere. In the longer run, prosperity derives from what the human enterprise contributes to the world around it, not from what is extracts. If we are serious about human advancement, we must find approaches that address the poorest, most marginalized sections of society, and accommodate the last man. This is the path that Mahatma Gandhi had advocated, it is one that has been recognized in the decision of the Nobel Committee to award this year’s Nobel Prize in economics to Amartya Sen, an Indian economist whose life-long work stresses this philosophy.

Ladies and gentlemen;

I believe that the new millennium will mark the re-emergence of Asia on the world stage. More importantly, it will mark the self-discovery of Asia as Asians re-discover each other and the long forgotten ties of history, culture and shared values that once united them. Friendship and cooperation amongst the nations of Asia is but natural and will proliferate as the peoples of Asia begin this voyage of rediscovery. Asia’s future fate, just like its past history is intertwined. Right through the ages, scholars and sages, traders and adventurers have travelled from one Asian country to another, disseminating ideas and messages, carrying religions and philosophies. For over 2500 years, from the day’s of Gautama Buddha if not earlier, Indian influences permeated to virtually every nation of Asia, just as influences from all across Asia have been absorbed and assimilated in India. It is this natural affinity which led Pandit Nehru to remark that an Indian, wherever he may go in Asia feels a sense of kinship with the land he visits and the people he meets.

The natural order of things was broken, first by the advent of colonialism and then by the Twentieth century, with all its wars and cold wars dividing Asia into spheres of influence, each of which was cordoned off from another. For the most part of this century there has been a British Asia, a French Asia, a Dutch Asia and an American Asia, but there has not really been an Asia for and by the Asians themselves. It is this Asia which is being born today.

I concede that we have ourselves been guilty of maintaining a North South bias. For most of these past fifty years following our Independence, the size of the Indian Mission in London has exceeded that of all our Embassy’s in Africa or in Asia put together. Indo-China and South East Asia, a region that has long figured in the literature, religion and mythology of India had been all but obliterated from the Indian memory, and only recently, in 1996, have we been able to establish strong institutional linkages with ASEAN which will serve to renew and revitalize these historical ties.

In order to redress this historical imbalance, Indian foreign policy has for long stressed the importance of India’s neighbourhood. We have always felt tied with a special sense of affinity and destiny to the peoples and countries of Asia and Africa. There was never a time when the concerns and causes of these brother countries were not India’s concerns and causes as well, right from the days of the fro-Asian Conference held in New Delhi, to Bandung, to the Non Aligned Movement and today in new fora such as the G-15, the Indian Ocean Rim Grouping, in which India plays a leading role.

The neighbourhood foreign policy that I was privileged enough to put into practice as Foreign Minister and later as Prime Minister of India - what has come to be called the Gujral Doctrine - built upon the traditional neighbourhood diplomacy of ours to infuse it with new dynamism and vigour.

I confess having been influenced by the success of regional cooperation in shaping some of the grandest landmarks of the modern age. Europe which was all but devastated after two bloody world wars, today has the beginnings of a common currency, a common Parliament, and unified politico-military structures. Latin America, South East Asia and South Africa are witness, in varying degree, to similar economic miracles. I felt that South Asia too should try and look ahead instead of remaining trapped in the past, forever the victims of a frozen, medieval mindset.

As and when regional cooperation in South Asia does take off, the gains to each country and to the subcontinent will be immense. Taking just the case of energy for example, we see that Nepal is sitting on an unutilized hydro-electric potential of nearly 100,000 MW energy which is flowing untapped into the sea. In Bangladesh, large reservoirs of gas are being discovered almost daily, gas which can never be consumed in Bangladesh alone. In Pakistan, over-capacity in the electricity sector has led to inflated tariffs and high costs for producers and consumers alike. In India meanwhile, perennial power shortages impede our factory and farm production while causing untold misery to consumers. Instances of such wasted opportunity can be multiplied many times over. To break the vicious circle of suffering people, wasted resources and political deadlock, someone had to lead the way and win the necessary confidence and goodwill, particularly of the smaller South Asian nations. The Gujral Doctrine says that India, as the natural leader of South Asia, should not shy away from the extra contribution, the added effort that the mantle of leadership necessarily entails. That is why to the well established principles of the Panchshila, it adds the novelty of non-reciprocal treatment. This approach, I am happy to say, was instrumental in creating a new climate of trust and cooperation in South Asia.

The rapid development of Korean-India ties is indicative of the great scope and opportunities that are available to those who believe in Asian cooperation. Apart from a select few, Korea was all but unknown in India as recently as five years ago. Today your country is the second-largest investor in India. In 1996, I believe the total Korean investment in India amounted to US$ 960 million. A little of Korea has found its way into every Indian home and TV screen as Korean companies delight Indian consumers with a whole range of products, from cars to refrigerators and washing machines. Korean trade and industry has arrived in India in a big way, both for local production as well as for utilizing India as a production base for third country exports. There is mutual joy and mutual benefit in this embrace.

Ladies and Gentlemen;

Let me conclude by briefing you about my country and its achievements.

In India, we have just finished celebrating the fiftieth anniversary of Independence. Over the past fifty years, Indian democracy has surmounted numerous challenges and it is today a living, thriving entity. Twelve general elections have taken place in the years since our Independence, all of them have been scrupulously fair and mostly peaceful. The size of the electorate has grown steadily and today exceeds 500 million voters, or more than the entire population of Europe. At the grassroots level, there are 250,000 democratically locally elected local bodies or Panchayats, manned by over 3 million elected representatives, one third of whom, by statutory provision, are women.

Indian democracy has successfully incorporated all the myriad diversities of our land and given them expression in one national mainstream. In this gradual and evolutionary manner has the long desired but equally elusive goal of Indian political unity slowly but surely been transformed into ground reality. Democracy’s participatory processes and self-correcting mechanisms have built an edifice which 950 million citizens are today proud to call their home. This is a great achievement, by any measure, and for us in India, one of particular historical significance. In a way, it is a civilizational landmark that we have successfully crossed, one that will contribute greatly in the years ahead, to strengthening India and enhancing her role in the world.

Ladies and Gentlemen;

In May 1998, as you would no doubt be aware, India undertook a limited series of nuclear tests following which she declared herself a nuclear weapon state. India joined the league of Nuclear Weapons States with great reluctance and because in the end we were left with no other real choice. Going nuclear has never been an Indian preference, our over-riding preference is for a world free of all nuclear weapons. The fact is that we find nuclear weapons abhorrent, and we feel that the best guarantor for our security and indeed everyone else’s security as well is a world from which the curse of Nuclear weapons has been totally eliminated. Even today, India is willing to renounce her nuclear capability if all the nuclear weapons states are agreed to do the same.

What we have difficulty in accepting is that countries armed to the teeth in nuclear weapons should preach to us the virtues of disarmament. This is hypocrisy somewhat akin to a clique of drunkards trying to enforce a regime of prohibition. This situation, bad enough in itself, was further compounded by growing evidence of the clandestine proliferation being encouraged in India’s neighbourhood by certain nuclear weapons states. We had repeatedly pointed out to the Nuclear Weapon States that in the given situation India’s self-imposed restraint should not be taken for granted and that we needed a clear commitment by the nuclear weapon states on a time-bound programme for the elimination of all nuclear weapons for us to stay the non-nuclear course. I myself, both as Foreign Minister and later as Prime Minister of India addressed every relevant international forum on this theme. But our pleas went unheard. The result was the nuclear tests of May 1998.

There is one important lesson that clearly follows from the whole sorry episode - the world’s disarmament regime as it currently stands is fatally flawed. The inequity of the Non Proliferation Treaty generates contradictions which are not amenable to reconciliation, and the Nuclear Weapon States should not make the mistake of thinking that this arrangement can be perpetuated indefinitely. No system which is closed to outsiders, which divides people into separate categories, which restricts power and privilege to a chose few can ever hope to survive indefinitely. You can build a Berlin Wall, but you cannot escape reality for all time. Just as feudalism failed and apartheid failed, just as any enforced imperial dispensation must fail eventually before open, consensual, democratic arrangements so too is the NPT doomed to failure unless it is seen for what it was - a transitory arrangement pending steps towards complete global disarmament. But in 1995, the Nuclear Weapons States deemed it expedient to overlook their obligation under Article 6 of the treaty, while at the same time making a transitory arrangement permanent. We are all now paying the price for this expediency. Unless we see this particular crisis for what it is, a crisis of the present disarmament regime, unless we make progress towards comprehensive global nuclear disarmament, we shall never succeed in making the world more secure.

Ladies and Gentlemen;

India’s emergence as major economic power is still on course. It is true that India has not so far kept up with the rapid strides that some Asian nations have successfully made. Maybe it is also true that democracy does not allow for rapid economic leaps or social transformations, but I do feel that the economic fruits of democracy are more enduring and deep-rooted. The options that India has taken, of more gradual and incremental change through the democratic processes is better suited to India’s genius. This has ensured that the process of growth and development has permeated to the grassroots and been internalised by people. It has enabled our peoples natural talents to grow, develop and be harnessed to the benefit of society. It also ensured that modern skills and technology and best managerial practices are absorbed and widely disseminated throughout the economy. I am convinced that the advantages of democratic growth far outweigh the disbenefits, and the path we have adopted will allow India to grow and thrive much after the quicker, more impatient command economies suffer fatigue and slowdown.

Our economy is still on the acceleration path. The annual rate of growth of the Indian economy which averaged 3.5% in the early decades after independence, increased to 4% in the 1970’s, and then to 5% in the 1980’s. In the 1990’s, our rate of growth is still higher at an average of 6% per annum so far, and barring any unusual adverse developments, such as a prolonged global recession, I do see this trend of steady and sustained growth continuing in the years ahead. Moreover, there has been a subtle qualitative changes in the nature of India’s economic growth - whereas in the early years of independence it was a top down process initiated by the investments and spending plans of the Government, growth today springs from individual initiatives and decisions. Likewise, in lieu of the heavy investment led growth of the early years, today we have growth through the application of science and technology in the economic field, through refinements in quality and standards and generally through a process of greater sophistication in technological and quality parameters. India’s scientists have done the country proud in many frontier areas of science, including space, ocean technology, medical sciences and biotechnology, to name but a few areas. The contribution of Indians, both in India and abroad to opening new vistas in the area of electronics and computer technology, particularly software, and Internet applications, is of course well recognized. All these factors have greatly improved the dynamism of the economy and lead me to believe that the higher rates of growth witnessed in recent years will be sustained.

There is no doubt that serious problem areas remain. Our battle against unchecked demographic growth has barely begun. The growing numbers of people who are young, energetic, talented yet unemployed results in growing frustration and alienation in society. New threats in the form of health epidemics and environmental degradation also loom large. These challenges cry out for a concerted response. Even as the State’s direct involvement in economic activity tapers off, there is thus a felt need for greater State intervention and, importantly, more effective intervention in important social sectors and for human development. The provision of drinking water, primary healthcare and housing to meet the basic needs of every citizen, have already been identified as priority areas and we have set ourselves the goal to make the nation fully literate by the year 2005. Increased literacy levels, better healthcare, the empowerment of women are all powerful stimuli for economic growth. In India, we have seen how the States that have improved social indicators is areas such as literacy or the status of women, have also benefited from higher per capita incomes and more rapid economic growth. The task before us really is to ensure that the socio-economic achievements of India’s more advanced states are replicated in all other areas of country as well. This is a task that allows for no delay, as otherwise regional imbalances could become a source of tension in India’s federal polity.

All in all, it is estimated that India is likely to become one of the largest markets in the world, with a middle class estimated to be in the region of 500 million by the year 2025. The World Bank has predicted that India’s share of world trade and output will double in the next two decades and that this will "fundamentally alter the way the world does business by the year 2015". Other global economy watchers have predicted that by the year 2015, India will emerge as the fourth largest economy in the world. We remain confident that this prediction will come true.

The India of today, and even more so the India of tomorrow, provides powerful incentives to Korea and Korean companies to look towards it. On our part, we need Korean skills and technologies in a wide range of fields vital to the Indian economy. An area of special concern to us is the strengthening of our economic infrastructure. Indeed where this is concerned, India is one of the world’s pre-eminent development frontiers. For we must be one of the few countries in the world where every year there is the need to add tens of thousands of megawatts of power, thousands of kilometres of roads and highways, millions of telephones and millions of tonnes of nitrogen or cubic metres of gas. I would like to use this opportunity to invite those Korean companies and institutions who have not so far visited us to come to India to participate, to contribute and to benefit from India’s gigantic task of national construction.

Ladies and Gentlemen;

India’s thriving democracy and the resilience of her political and civil institutions are her greatest achievements as an independent nation. When the chronology of the era is written and the verdict of history passed down, India’s success in integrating a vast diverse land through the democratic processes will certainly be described as one of the great achievements of the latter half of the Twentieth Century.

India’s democratic traditions will continue to bear fruit in the years ahead. This foundation provides us the strength and stability to weather such storms as may lie ahead. As you know, India inhabits a region that is vulnerable to economic and political difficulties. An encircling arc of anxiety stretches all the way from the Middle East to South East Asia. India by virtue of her position in the region, and on account of her relative strength and stability, may well be called upon to exert a calming, pacifying influence in this region. Joining hands with the other great peace-loving nations of the world, India will serve the interests of a peaceful and equitable world order. India’s destiny I think decrees that India play an increasingly important stabilizing role in the affairs of Asia, and of the world. She will do so not as a leader, not as a follower, but as an equal co-partner in Asia’s shared destiny.

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