INDIA-TODAY AND TOMORROW
An Address by
AMBASSADOR BRAD KUMAR NEHRU Commissioner General for Economic Affairs, India
Thursday, March 2nd, 1961
CHAIRMAN: The President, Alexander Stark, Q.C.
MR. STARK: Today we welcome Ambassador Braj Kumar Nehru, Commissioner General for Economic Affairs, India. Although just over fifty years of age, Ambassador Nehru has long been regarded as one of the most distinguished members of the Indian Civil Service. He has served his country in various capacities and in many different ways. He received his education, first of all, at his home university in Allahabad, and then at the London School of Economics, and then at Balliol College, Oxford, and finally at the Inner Temple.
In his present important position, he has been described as "Chief Negotiator for Economic Aid to India" and also as his country's "Roving Economic Ambassador". Mr. Nehru started his official career upon joining the Indian Civil Service in 1934 as the Assistant Commissioner in the Punjab. In 1939, he was posted at the Union Government's Headquarters as Under-Secretary to the Department of Education, Health, and Lands. Thereafter he joined the Department of Finance. And in 1957, he was appointed Secretary to the Government of India, Department of Economic Affairs.
Ambassador Nehru is no stranger to international financial negotiations. He represented India at the Reparations Conference in 1945, at various Commonwealth Finance Ministers' Conferences, and at a series of Sterling Balances Conferences. Mr. Nehru also represented India at the United Nations General Assembly from 1949 to 1952; and for three years he was a member of the United Nations Advisory Committee on Administrative and Budgetary Questions.
Ambassador Nehru is married and has three sons. Presently residing in Washington, our guest has made the trip today for the express purpose of speaking to The Empire Club of Canada and we now ask him to do so, on a subject very dear to his own heart, "India--Today and Tomorrow".
MR. NEHRU: I am greatly privileged to be given this opportunity to address so distinguished an audience in this great metropolis of this great country. I am particularly honoured that you should have desired to discuss the affairs of my country. Relations between Canada and India have been intimate ever since we became independent; and indeed, the cooperation that exists between our two governments, and the goodwill and friendliness that prevail between our peoples, can well serve as an example of what relations between members of the Commonwealth should be. I have no doubt, Mr. Chairman, that meetings such as this serve greatly to strengthen the bonds of the Commonwealth which all of us are so anxious to preserve and to strengthen.
In order to understand what has been happening in India in the immediate past, the direction in which we are attempting to move, the problems with which we are faced, and the manner in which we are proceeding to solve them, it is well to remember certain basic facts about India. The most important fact about India is that it is a very large country-not just one country among others, but a vast subcontinent inhabited by 425,000,000 people. The size of India, in terms of area, may not seem impressive to a Canadian audience, for India, as you know, is much smaller than Canada in this respect. In terms of population, however, India is the second largest country in the world, accounting for one-seventh of all humanity or 60 percent of the total number in the Commonwealth. This is a fact which should never be forgotten for it is at the same time our major weakness and an important source of strength; and it is, in any case, one of the main factors which give to India the 'importance that it has in the world today. Our population is our weakness because we do not today have the means to occupy it gainfully; it is our strength because the consciousness that, for better or for worse, we in India are responsible for the destiny and well-being of one-seventh of humanity is an all-important factor in forging our sense of national resolve and purpose. From this enormous size, it follows also that all Indian operations, whether in the political, the economic, or the cultural field, have to be carried on, if they are to be meaningful, on a scale unparalleled anywhere else in the world except, perhaps, in China. A dam here or a powerhouse there, a few new schools or a new hospital or two, make no dent on the problems of India. What is required in a country of our size is to organize and to use the energies of millions and hundreds of millions of people and to expend for the national benefit not millions, but thousands of millions of dollars.
The second factor to be remembered about India is that it is an old country with an old and continuous civilization. We do not have in India a tabula rasa. The minds of men in India are not a vacuum to be filled by whatever winds that may, for the moment, be blowing from the west or the east. These minds are firmly rooted in a tradition that is thousands of years old and which has developed over the centuries a sophistication and a standard of values that enable it to withstand the temporary changes of fashion. Here, again, this is our strength as well as our weakness. On the one hand, we are not likely easily to be carried away by new and tempting ideologies; on the other hand, there is a resistance even to the change that is necessary to bring the minds of men into conformity with the needs of the twentieth century.
The third factor-and this is so fundamental that it colours and governs the whole of Indian action-is that India is a poor country. I have found it extraordinarily difficult to project, in any adequate terms, to the Western mind the picture of Indian poverty. The kind of poverty that prevails in India today is something that never prevailed in the northern half of the western hemisphere at all, and, though it did prevail in Europe, it disappeared so many centuries ago that nobody today can visualize at all what poverty in the true sense of the word means. The per capita income in India today is about $70 per annum; that of Canada is $2,050 per annum. It may help you to imagine how the average Indian is compelled to live if you were to attempt to limit your weekly expenditure on food, housing, clothing, transportation, medical relief, schooling, and everything else, to a dollar and a quarter. In physical terms, this means that the average Indian has even today not enough food or clothing, nor housing, nor schooling, nor medical care and, indeed, in various parts of the country, not even clean water to drink.
That is why, ever since we became politically independent and surmounted our initial problems of transition, our major concern has been with the economic development of our country. The responsibility for running the affairs of our country was regained by us only thirteen years ago. Indian independence was gained at the end of a war which had further impoverished an already poor Indian economy. It was accompanied by the partition of the country and by a dislocation in the administration as a result of the changeover. There was also the additional task of ensuring the political unity of India. As you may recall, India under the British was divided into British India, which was directly governed by the Goverment of India, and over 500 princely states, the rulers of which had very considerable internal political authority. On the termination of British rule, this patch-work had to be fused immediately into a single political whole. Otherwise it could well have caused the emergence of independent or autonomous states on the Indian subcontinent, leading to the balkanization and eventual disintegration of India altogether. It is characteristic of the Indian genius that these 500-odd princely states were absorbed into the Indian Union without a single shot being fired in anger, except in one particular instance. The princes still remain with their private properties intact and with pensions from the State, but without any political or ruling power. When revolutions of this nature have occurred in other countries, it has been more usual for the dispossessed to disappear along with their possessions.
The partition of India was accompanied by a great deal of localized violence and resulted in an influx into India of 7,000,000 to 8,000,000 refugees from West Pakistan alone. The administration was disorganized partly as the result of the withdrawal of the British element in the services, partly because of the decision of administrative cadres between India and Pakistan, and partly because of the merger into the Indian Union of the Indian states. Added to all this, was a Communist uprising in that state which caused, as I have mentioned, shots to be fired in anger. It is remarkable that all these difficulties were overcome within the short period of a couple of years, thereby enabling the Government and the people of India to devote their energies to the real and constructive tasks ahead.
The main task, and in our circumstances perhaps the only task, with which the Government of India was faced was the removal of the grinding poverty of the people. This was, of course, easier said than done, for increases in material production in a society too poor to afford the tools of production, is by no means an easy task. The process of economic development is complex, and the poorer the society, the more difficult it is to get started with this process. Increased production is almost a direct function of capital investment. Capital is nothing more than the difference between current production and current consumption. In all poor societies, and India is no exception, current production is so low that it can barely take care, even at subsistence level, of the consumption needs of the people. There are no savings and, consequently, no capital investment. Therefore, there is no increase in production, and the vicious circle continues growing, in fact, worse because population continues to increase all the time. No change from this situation can take place unless either capital is injected from abroad or is squeezed out of the people through further restrictions on consumption, which in a poor society cause infinite hardship and may even result in actual starvation.
The totalitarian answer to this dilemma of all poor societies is to create a political structure which is impervious to the discontents of the people. Having created a powerful and irremovable executive, you are then in a position of being able to compel your subjects to cut down their consumption regardless of the hardship and suffering this may cause. Resources thus saved are invested in order to increase production, and this further production is re-invested so that in a comparatively short period of time, a strong productive apparatus is created which can then satisfy the consumer needs of the people or be devoted to military purposes or, a little later, to both. This has been the method employed by the Soviet Union with the result that in forty years, it has converted itself from a condition of underdevelopment not very far removed from that of India today to one of the foremost industrial powers of the world. This is also the method that is being used in China, and the results already produced have been wholly remarkable.
This method was also open to us but we did not adopt it. We adopted instead a free and democratic constitution guaranteeing the citizens of India all the liberties that are usually associated with democracy. We have universal adult franchise, as a consequence of which we have the largest democratic electorate in the world today. The liberties of the individual, of speech, of association, of worship, of assembly, and the like, are protected by the constitution and are enforced by the Supreme Court. Nor is this all on paper. It is our pride that, in contrast to what has happened in many countries in our part of the globe, we have for the last thirteen years maintained as vigorous and as free a democratic system as is to be found anywhere in the world.
For this choice and this success, there are many reasons. First of all, the Indian historical tradition, though we have always had a monarchal and autocratic central government, has been one of democratic authority at the local level. The system of the Panchayat, which is now being revived, was essentially a democratic one. Secondly, the whole nature of Indian philosophy, religion, and tradition, makes the Indian highly individualistic and not willing to surrender himself, body and soul, to the authority of the State. Thirdly, one of the effects of the British connection over the last 150 years was that the British liberal tradition became part of the Indian mental make-up quite as firmly as it has done in Canada. Fourthly, and this explains greatly the Success of democracy in India, we had had, before becoming independent, considerable training in the democratic way of life. And here, I refer not to the limited legislative assemblies set up by the British, but to the mass political movement led by Mahatma Gandhi. The Indian National Congress had been working for Indian independence ever since 1885. But from 1920 on, it became a mass movement with a country-wide organization with every office in it, from the leadership of the village to the Presidency of the Congress itself, held by election. The experience of millions of people working together for a quarter of a century on the basis of democratic equality in the task of achieving political independence for India, was so powerful a force in affecting the entire Indian scene that its results are not likely to be lost in a short time.
I have digressed from my main theme, which was to explain how the Government of India has tackled the basic problem with which it is faced. But it was necessary to explain why it was that we did not choose the weapons in our war against poverty which seemed the most suited for that purpose and why instead we adopted a form of political organization which, undoubtedly, in an underdeveloped society, stands in the way of economic development. The answer is, in short, that we are so firmly wedded to the democratic way of life that we are prepared to face the difficulties in order to maintain the freedom and the dignity of the individual. Whether we will in the future be able to maintain this system Or not, is an open question. The hungry man or the homeless man is much more concerned with filling his stomach or being sheltered from the rain than he is with the abstract values of democracy. It is true that he values individual freedom also; but it is natural that he should value it somewhat less than those whose basic material wants have already been met. In societies of Our kind, democracy can be maintained only if it is demonstrated that even under a democratic System, there can be material progress. The progress does not have to be spectacular; but it, nevertheless, has to be steady and it has to be sufficient to give hope to the man at the bottom of the social and material scale that his condition will not always remain as unbearable as it is today. If a system of social organization is incapable of giving to him that hope, then that system of society does not have very much chance to survive, nor indeed, would I say, does it deserve to survive.
Being faced with the task of the removal of poverty within the limitations of a democratic system, the Government of India decided to follow a system of planned economic development. A Planning Commission was established in 1950 to take stock of India's resources and India's needs and to draw up blueprints for integrated economic development on all fronts. This involved drawing up plans not only for industry and agriculture, but also for such basic social overheads as education and medical care. The First Five-Year Plan was completed in 1956; the Second will be completed at the end of this month; and the Third Five-Year Plan will Start this year. During the last ten years, there has been an investment in the Indian economy, through both public and private channels, of about--$22,000,000,000. The result has been an increase in the national income of about 40 percent giving an average growth of 3.5 percent per annum. Population, however, has grown in the meantime at the rate of just under 2 percent per annum, with the result that per capita incomes have increased only at the rate of about 1.5 percent per annum. If the Indian economy had been rich, a rate of growth of 3.5 percent per annum could perhaps be regarded as satisfactory. But starting from a base of no more than $50 per head per annum, this increase has meant an increase in real incomes of about 2 cents a week, and this can hardly be regarded as satisfactory.
The Indian economy has, nevertheless, been diversified and strengthened and is in a position today to grow at a faster rate in the future. The production of food grains has gone up from 52,000,000 tons to 75,000,000 tons, though this is still short of our internal consumption. Cloth production has increased from 4,600,000,000 yards to 7,600,000,000 yards. Cement production has gone up from 2,700,000 tons to 8,800,000 tons. Steel capacity from. 1,200,000 tons to 6,000,000 tons; 46,500 miles of surfaced roads have been built, and a number of new industries have been established, such as the manufacture of bicycles, of which we now make a million a year, and the manufacture of automobiles. The percentage of literacy has increased from 16 percent at the time of independence to 40 percent now; the number of school-going children has gone up from 23,500,000 to 41,100,000. Diseases like malaria and cholera, have been brought under control and virtually banished, while the number of hospital beds has increased from 113,000 to 160,000.
There has in absolute terms been considerable progress, but in relative terms it cannot be regarded as satisfactory. We feel that if the political and social stability of India is to be maintained and her free and democratic institutions are to withstand the onslaughts of discontents caused by material hardship, we have to do substantially better than we have done in the past. We feel that the rate of economic growth must be increased to a minimum of 5 percent per annum, and our friends abroad who have studied the Indian situation agree that our assessment is in the nature of a minimum requirement. We, therefore, want to step up our rate of growth to this percentage. At the same time, we want to arrange our investment priorities in such a way that we should be able before long to finance the development of the Indian economy from the savings of the Indian people themselves without resort to aid from foreign governments. In order to get a 5 percent rate of growth, there has to be an investment of around 15 percent of the national product. The rate of savings in India ten years ago was 5 percent; it is now about 8 percent. We hope to be able to raise this to 11 percent at the end of the Third Five-Year Plan, and to 14 to 15 percent by the end of the Fourth. If we are successful in this effort, we should then be able to guarantee on the basis of Our own savings, a rate of growth in the Indian economy which we feel will make our people satisfied and keep our society stable. The difficulty, however, is that the growth has to take place now and the savings cannot be generated till later. There is, therefore, a gap which has to be filled by imports of capital from abroad during the next few years.
During the last ten years, we have received aid from foreign governments, including your own, which has been of immense benefit to us. Out of the $22,000,000,000 invested in the last ten years, five-sixths were financed by resources raised from the Indian people themselves, one-sixth coming from abroad. We assess that in the next ten years we will need to invest in the Indian economy a sum of around $50,000,000,000, of which we hope to be able to raise $40,000,000,000 ourselves. I should like to point out that for a poor country such as India this is an enormous figure to ask the people of the country to save. It is even more difficult to achieve this target because the generation of saving in India, whether it is by taxation or by borrowing or through other means, has to be done with the willing consent of the Indian people and cannot be imposed on them. This saving also represents a very much higher proportion of internal effort in the task of development than has so far been put forward by any other country similarly placed. We cannot, however, without disrupting our entire social and political system, hope to raise the remaining $10,000,000,000 internally. This must come from abroad, and we hope that friendly foreign governments will be able to assist us to the extent of a billion dollars a year.
The figure, when first stated, seems large, but when it is remembered that total national incomes of the developed parts of the world are today around $1,000,000,000,000 and that the annual increase from these incomes is between $30 and $40 billion a year, the figure tends to fall into proper perspective.
And I should not fail to remind you of the stakes involved. There are 1,200,000,000 people in the non-Communist part of the under-developed world. To all of them, the removal of poverty from among their midst is a categorical imperative from which their governments and their leaders cannot escape. There are two contrasting methods of economic development which hold the field today: the one exemplified by China, and the other by India. The Chinese experiment has a precedent; the Indian has not, for no large underdeveloped country has as yet developed over a short time span under a free and democratic institution. We do not claim to be engaged in an economic race with China; we are content to move along at our own pace as long as it is satisfactory enough to maintain the freedom of the individual. The rest of the underdeveloped world is watching with some considerable interest the progress of these two experiments. And if the Indian experiment, which is being carried on in better conditions than are available anywhere else in the underdeveloped world, cannot succeed, then it is likely to prove that the methods we have adopted were the wrong ones and do not provide the answer.
India today has proved that a stable democratic society is possible in a poor and underdeveloped country. India hopes to prove tomorrow that a democratic society also has the answer to the challenge of economic development. And in this task, we hope that we will continue to have the support of our fellow members of the Commonwealth.
THANKS OF THE MEETING were expressed by Mr. Douglas Best.