Prime Minister Manmohan Singh Interview

Raimo Valkama
”We must ensure that growth is focused more properly on the needs of the poor”

Teksti Katri Merikallio, Delhi, Intia

The role of India in the world economy is growing, but the economic miracle of India has not changed the life of the poor. Education is crucial, says Indian Prime Minister Manmohan Singh who arrives in Finland next week.

Prime Minister Manmohan Singh meets Suomen Kuvalehti in the same New Delhi study where all the prime ministers of India have worked since independence, including Jawaharlal Nehru and Indira Gandhi. The Prime Minister is waiting on a couch in the study. Although it is his birthday today and his schedule is tight, he is calm and expresses himself very clearly, as always.

He has only recently returned from Brazil and Cuba and is still going to visit South Africa before coming to Helsinki for the India-EU Summit, which will be held on October 13. It will be his first official visit to Finland as a Prime Minister.

Mr. Manmohan Singh, how do you see the economic and political relations between the EU and India and what are your expectations for the India-EU summit in Helsinki?

“India and the EU are the two largest democracies in the world. Our relationship with the EU is special to us and we accord high priority to the Intia-EU Strategic Partnership. Our engagement with Europe is steadily intensifying, both with the EU and with individual European countries.”

“EU is India´s largest trading partner and the second largest source of FDI. Indian firms are also investing increasingly in the EU countires. Our relationship has evolved from having a primarily economic content to political, strategic, scientific, research, academic, parliamentary and civil society exchanges, indicative of the intensive engagement that India and Europe have over an entire range of issues.”

“India and the EU had finalized a comprehensive Joint Action Plan at our last Summit held in September last year. This laid down the path for implementing the India-EU Strategic Partnership encompassing the whole range of our relationship and considerable progress has been made on all aspects of the engagement. We look forward to a useful and productive summit that will provide further impetus to our Strategic Partnership.”

The role of India in the global economy is changing rapidly. Where do you see India in 10 years of time?

”India already is in terms of purchasing power parity calculation the 5th or 6th largest economy in the world. I do believe that our share in global national income will increase in years to come. Our ambition is that the Indian economy should grow annually at about 8–10 per cent during the next decade. That would give India a much higher profile in world trade, world capital flows and in world cooperation in the field of technology. But India will stay a very poor country by international standards.”

The economists say that the present economic growth is not reducing poverty. What should be done differently?

“Our challenge really is to accelerate the growth process but also to ensure that this growth is focused more properly on the needs of the poorer sections of our society. We need growth but it is not a sufficient condition in moving towards the inclusive type of development that we need. So that even at a lower income per capita we can get rid of the harsh edges of extreme poverty which still afflicts millions and millions of our people.”

“We still have a problem ensuring that all our children are in school, and they get descent quality education. We have a long way to reach the health standard even of that of Kerala state. And it will take quite some time to acquire the status of developed country but in human resource terms it is possible to bridge the gap between India and the developed world.”

“We need a high growth rate, we have to generate more wealth before we can talk of redistributing wealth. We must also adopt purposeful policies that ensure that more and more wealth accrues to the poorer section of people either directly as participant in schemes of employment or though social transfer like state sponsored education and health which particularly concentrates on the needs of the poorer sections of our society.”

The economists say also that the present economic growth is not creating jobs. Still there will shortly be more than 70 million young Indians coming to the job market in. Where are their jobs?

”The services sector is responsible for about 50 % of our gross domestic product, and that will continue to grow. A lot more people will be needed in this sector but mainly educated persons. So that is a challenge for the Indian education system. But in manufacturing also there is considerable scope for employment particularly for semi-skilled workers. We need to give much more emphasis to manufacturing, and particularly for those goods which have a market abroad.”

And what could be such new areas in manufacturing?

“My belief is that we have to create an enabling environment where manufacturing becomes profitable. I don’t think governments are very good at picking the winners, I would not like to say that I know where the new jobs will come from. In a market economy things can move at a speed which nobody can expect.”

It is often said that the future of India depends on how much she is ready to invest in education. Still the percentage of GDP spent on education is very low.

“Yes, now the percentage is about 3, 9 percent – our ambition is next five years to raise it to close to 6 per cent. That is our commitment in our election manifest. Also in public health spending we are spending about 0.9 –1 percent of our GDP and we need to raise it to at least 2.”

But your government just recently tabled the bill on the right to education for all, and it was sent to the states. Why did you decide on that?

“We want to build a national consensus. Because once we pass a central bill, it becomes the obligation of central government to find also the resources – and the central governments capacity to take all these new responsibilities is rather limited.”

“A very large part of education is in the state sector and we would like the states to be active partners in this. We have produced a model bill and would like each state to adopt this model bill.”

When talking of health and school, many people say that the government has all the good programs which look fine on paper – but the problem is in implementation.

“I agree. That is why we want to devolve more and more of these function to the local level government. We would like to move towards a more participatory system of development in which local communities take charge of education and health facilities given by the public sector. That would also reduce the amount of leakages that take place when these services are administered far away from the people who use them.”

Approximately 70 percent of the population get their income from agriculture. Yet the alarming news from the countryside tells about increasing poverty. Last week I visited Vidarbha and sat in many homes where a badly indebted husband had committed suicide. And the numbers of suicides are only increasing.

“I have also been to Vidarbha and the basic problem there is that it is a mono crop area dependent on cotton. They have not developed technologies which can raise the productivity of crops like Punjab or Gujarat have done.”

“In Vidarbha cotton is grown in rain fed areas and these new hybrid technology seeds are not so sustainable there. We should expand the irrigation facilities so that they will get a better yield from existing land.”

“Also the problems of some of these farmers is the increasing indebtedness. We have now ordered a nation-wide inquiry to look into the problem of agricultural indebtedness – whether it is a generalised problem and how it should be handled. We are hoping that within 4-5 months we will find solutions.“

So you are concerned about the situation in the agricultural sector?

“Yes of course, but it is not a question only of Vidarbha. Farmers have committed suicide also in other states. The farming system in these drought prone areas is facing a crises. We are working on packages on all theses 31 districts dealing with loans and with irrigation and other support systems like dairying and horticulture so that they would not be dependent on a single crop.”

You have only recently met with President Musharaff. How would you define India’s relationship with Pakistan today?

“I am happy at the outcome of the recent meeting between President Musharraff and myself in Havanna. We have agreed on a joint institutional mechanism to tackle terrorism and I hope Pakistan will cooperate us in this initiative with sincerity. It is important to bear in mind that President Musharraff’s commitment in January 2005 not to allow any territory under Pakistan’s control to be used to support terrorism in any manner was the basis for the current process of the Composite Dialogue. For the dialogue process to be sustained, however, it is important for Pakistan to fulfil its commitment against terrorism.”

President Musharaff has proposed in his recent book that the Kashmiri problem could be solved by creating a special self-governance on both sides of the border. How do you see this proposal?

”I would not like to get into public debate with Mr. Musharaff on this subject. All outstanding issues which are relevant for Indo-Pak relation, we are willing to discuss, including Jammu and the Kashmir issue. I have said more than once to President Musharaff that we cannot discuss the transfer of territory or changing borders, and the right approach is to work together to make these borders irrelevant to the people on both sides of the border.“

“It is up to the two governments to create an environment where free movement of people and free movement of goods, co-operation in all areas, can prevail. That is the only approach which is feasible in the present situation.”

“Musharaff says that we cannot accept the permanence of the line of control, and I say that we cannot discuss the change of borders. So we have to find ways and means to harmonise these positions.“

It’s our turn

Three million doctors, engineers and technicians graduate in India every year. But only one in two women can read.

The rattle of the espresso machine echoes through the cool Baresta coffee bar in Mumbai. As they do every once every week, Aadya and Anu Shah order cappuccino and sit down at a small round table next to the window. Aadya, 13, has changed out of her school uniform into jeans and a new orange T-shirt and is already sucking coffee through a straw. Today there are no private maths or chemistry lessons – this one day a week is reserved for mother-daughter discussions.

Around the other tables in the café young men are talking loudly into their mobile phones and tapping out text messages. Almost all of them have an open laptop in front of them. Only the Bollywood music video blasting from the TV reminds us that we are in India.

Often, after the coffee Anu and Aadya Shah take a walk round the nearby stores but today they make their way straight home. A tropical thunderstorm can quickly catch you off guard, and in densely built Mumbai they are used to the fact that when it rains it rains a lot and the drains can’t cope.

Anu Shah, 47, is a housewife. In the morning she took Aadya to school and returned home to let in Padma Deshal, the cleaning lady. Because Padma has been cleaning for the Shahs for quite some time, Anu Shah was able to leave her to do the work and go straight away to see her elderly mother. In the afternoon she walked to collect Aadya from school, let in the cook and made her way to the coffee bar.

Anu Shah never really knows when her husband, Piyushi Shah, a successful cameraman, would manage to get home after his Bollywood shooting. Mumbai’s traffic is as unpredictable as its weather. A spacious, air-conditioned car, however, makes the jammed up streets and the oppressive heat more tolerable.

Waiting for Ikea

Both Anu and Piyush Shah are natives of Mumbai, Piyush from a five-children family of stone cutter, Anu from a middle-class urban home. For the first ten years of their marriage the couple lived in a single room at the home of Anu’s parents and saved money.

At the beginning of the 1990’s the economy began to grow and India opened up to the world.

”Before, if I wanted a car I would have to wait for years. Now all I need to do is walk to a shop and buy one,” says Piyush Shah.

Three years ago the Shah’s bought a hundred-square-metre home in a good neighbourhood. At that time it cost almost Euro 100 000 today it is worth considerably more than that.

Furnishing their home also required investment. ”I spent days leafing through the Ikea catalogue – it was just the type of light European furniture we were looking for. Indian furniture is often awfully heavy and decorative. But there isn’t an Ikea in India yet,” Anu Shah frets.

But you can find almost everything else in Mumbai. One after another, each finer than the other, shopping malls are appearing at a furious pace. The glass facade of the gigantic Atria shopping mall seems as though from another reality amidst the monsoon-ravaged buildings. And it is indeed from another world with its hundred or more departments offering only luxury goods: Swiss clocks, Italian espresso coffee makers, Rolls Royces and Samsonite suitcases. On a good day 15 000 suitable customers pass through the store’s security check.

A happily smiling bunny greets the sturdy children of wealthy families at the door and hands them a balloon. When the tangle-haired street children gather outside the store to wonder at the balloons and to wave at the bunny, the bunny turns its head away.

The future in design

Even though there is no Ikea in Mumbai, Anu Shah’s kitchen is just like any westerner’s: micro-oven, refrigerator-freezer and the gas oven is beautifully sunk into the teak-veneered furniture. There is a television in every room, everyone has their own mobile phone and Aadya, too, has a computer in her room.

”Except that my internet connection has been down for two weeks already,” Aadya point out, enjoying a snack of noodles and Pepsi.
Aadya attends a private school maintained by the church.

”The schools in India demand a lot of the family, only seldom can a child manage there without support. And the competition is really hard. I write thorough summaries for Aadya myself so that she doesn’t have to read all the books,” Anu Shah says.

Because the quality of the state schools has collapsed, everyone who possibly can tries to get their child into one of the rapidly-growing number of private schools.

Anu and Piyush Shah stress that Aadya can decide herself what she wants to do with her life. But they have already seen that there is an excellent design institute in Ahmedabad where you can study not only art and graphics but also furniture design and film. All areas of great opportunity.
”I think, considering Aadya’s talents, it would be just the right school,” Anu Shah says.

From the Shahs’ wide 12th floor terrace a broad skyline of Mumbai opens up and the city looks fully built. But there you can see a gigantic bridge is underway and on the other side skyscrapers are appearing. The spaces between the buildings are full of low tin-roofed shacks.

Both Anu and Piyush Shah consider the market economy the right direction, the government is just moving too slowly.

”The government is hopelessly inefficient, infrastructure projects are left standing – that bridge should have been ready four years ago, and look where we are,” Piyush Shah gestures towards the bridge of which only perhaps one tenth is ready.

The World Bank is of the same opinion. India’s dizzy economic growth can continue only if it can quickly build new harbours, roads and power stations. Power failures, in particular, are testing the faith of investors.

Life under a film advertisement

The following morning Anu Shah’s cleaner, Padma Deshal, has already swept the floors and is finishing off in the toilets. Because the Shah home is her first of the day there are still five more homes to be cleaned. The wealthy middle class want servants.

Padma Deshal, 38, has been cleaning homes in Mumbai her whole life. Her own home is directly below the apartment block where the Shahs live, on the other side of the road. Her five-member family as well as her parents-in-law live in two small rooms in a shack across the top of which a giant film advertisement made of plastic has been pulled to keep out the rain.

”Now even the flood water can’t get in after we lifted the threshold. The only problem is the rats. I bought this cupboard to
keep the children’s school books away from them,” Padma Deshal shows her home which, seen from the yard, is a world away from the Shahs’ apartment on the twelfth floor.

Until August the same two rooms were also shared by Padma’s sister-in-law and her five children. Now there is plenty of room Padma Deshal thinks.

Of her three children, her daughter Pawan, 17, has dropped out of school and her mother is at present trying to find her a husband. The younger boys go to a state school.

Padma Deshal cleans for ten hours each day every day of the week and earns Euro 50 a month. Her husband earns Euro 65. It is enough for food, clothes, school bills and a little left over for saving. Fortunately the school bills are low because the family belongs to the lower castes. But any extra sickness expenses would soon eat up the savings.

Padma Deshal has also paid for her daughter to take a course in massaging and beauty treatment from her savings.

”I don’t want her to waste her life cleaning. I want her to do something more creative.”

The Deshals are also anticipating better times in regard to their dwellings. The shanty buildings are to make way for an apartment building of the same kind as the Shahs and under the law those who have lived in the shacks for a long time will be entitled to proper housing.

”But when it will be built, heaven only knows.”

An estimated half of Mumbai’s about 17 million inhabitants live, like the Deshals, in shanty buildings and the ever expanding slums. In the slums, it is common that 10-15 people share one room and according to statistic there is one toilet per 1 500 inhabitants.

And every year hundreds of thousands more come to the slums from different parts of India, not so much in the hope of wonderful work opportunities – but because it is even more difficult to find a means of income in the countryside.

Far away in the countryside

800 kilometres away from the coffee bars of Mumbai on the outskirts of the town of Nagpur the fields are deep green in blossom. But the deeper you drive into the countryside the more squalid the villages become.

In the village of Dahegdan an old man is just unhitching his ox from its wooden plough. The women walking along the dirt road are carrying enormous bundles of firewood on their heads. We are in the heart of India’s cotton belt.

Indira Kelkar, 40, is sitting on the floor of her small house crying inconsolably. Her three children are sitting around their mother staring gloomily, almost angrily at the floor.

Only a month has passed since Indira’s husband, Manohar Kelkar, was found hanging from a beam. It is still difficult to talk about it.

Indira and Manohar Kelkar had grown cotton on their small plot of land all their lives just like everybody else in Dahegdan and the surrounding villages have done for centuries. Now and again they have starved, now and then have managed to save a little. They have always believed, however, that the bad times would end sooner or later.

The past few years have been difficult for the Kelkar family. Although crops have been good, even excellent, the market price for cotton has fallen by half in ten years. And every year the illiterate Manohar Kelkar was obliged to borrow more money to buy ever-more-expensive seeds, pesticides and fertilisers. Eventually his debt was so great that he saw no way out. 899 other farmers in the same situation as Mamohar have made the same decision in the area of Vidarbha alone over the past 15 months.

In terms of the population this is not a great number but in the Indian culture the deed is inconceivable and is a sign of deep crisis.

Unlike the other great cotton producer, the United States, India provides no subsidies for the growing of cotton. It is for this reason that the world market price for cotton decides how many meals the Kelkar family eats.

And you can see from the children that prices have been low – all three children are clearly malnourished and quite too small for their age.

”I can only make one meal a day now. Every night we go to sleep hungry,” says Indira.

So do an estimated half of India’s women and children according to a fresh UN report. Half of India’s children are undernourished. Two million children still die every year from easily preventable diseases. In fact, according to the report, the poorest one third – an estimated 260-300 million people – get less to eat than 15 years ago: fewer than 1700 calories per day.

Indira Kelkar provides for her three children by working in her neighbours’ fields. For a full day’s work she receives 20-25 rupees or about 35 cents. The debt collector hasn’t called on the widow yet for repayment and Indira Kelkar doesn’t even know how much she owes.

”I know that I have no chance of paying it back.”

The only alternative is to sell the plot of land and join the enormous ranks of the landless – or trust that the government will finally react quickly to the plight of the countryside population.

The end of invisibility

There is no electricity in Indira Kelkar’s home, there is no running water and there is no food in the cupboard, but the children go to school – and Indira intends to make sure that they stay there.

”At the state school they get a lunch. Modest, but lunch nevertheless,” Indira Kelkar explains.

Now she has stopped crying, the children need their mother’s attention.
More and more families are realising the importance of education with more than 95% of children attending junior school. But only 60% of them see it trough to the end. Particularly for girls just a few years is considered enough.

And there would be a lot to do to bridge the gap. While three million engineers, doctors, scientists and technicians graduate every year in India, half of all women cannot read.

If, for example, Indira Kelkar could read she could find out to her astonishment that she and hundreds of millions like her do not really exist in India’s mainstream media.

In the internet coffee bars in Mumbai they would rather not know about the rural poverty. The growing middle class likes to read glossy magazines and newspapers, where there are positive success stories on the prosperous future of the country and it’s citizens.

And Indira does not fit in this picture.

The giant at a crossroad

The visionaries play with the idea that China will be the future factory of the world and India the world’s office: but Indian economist shake their heads at the idea. India needs labour intensive manufacturing – a clothing industry, jewel-cutting, food processing. India’s fast economic growth, an average of eight percent a year, has been more or less jobless. The much-discussed IT sector and the outsourcing of services have indeed brought work to 1.3 million Indians, but in a labour market of about 500 million people that is not a great deal.

Economic competitiveness and technological know-how have grown at dizzying pace over recent years. Economic indicators, however, show that India remains a small and poor country. Every sixth person in the world is Indian, but India accounts for just 1.3 % of the world exports of goods and services.

The gross national product is only four times bigger than that of Finland. The real consuming middle class consists of about 150-200 million Indians, around 14 percent of the population. 70 percent of the population still live in rural districts.

In order to ease the rural situation Prime Minister Manmohan Singh started an ambitious work programme in March which guarantees 100 working days each year to the poorest households.

”The programme can have a crucial influence on the lives of the poorest 300 million people. But only if it is implemented properly,” points out professor Jayati Gosh of the Jawaharlal Nehru University.

And the problem of a large country is its largeness. When a good solution has been found in one village, how can the idea be copied in the other 600 000 villages.

India is now at a crossroad. If it is not able to extend its growth to within the reach of the majority, the future can be unpredictable. But, in the view of Professor of Economy, Deepak Nayyar from Delhi, the possibilities are immeasurable.

”If India now doubled its investment in education, if we invested in people, in the poor rural areas and infrastructure, the prosperity would grown, wealth, consumption – everything – would grow. If you can connect these two worlds then the possibilities for a real economic miracle in India would be fantastic.”