A force to contend with

Print edition : August 09, 1997

We have enormously improved our capability to be self-sufficient despite the fact that our population has been increasing at a very high rate.

ON THE LAST FIVE DECADES: After Independence, we have had several decades of controlled economy. The focus tended to be on self-sufficiency and import substitution. Indian industry developed both in the public and the private sectors to make India self-sufficient in a variety of fields. Our progress after Independence was, for the most part, quite impressive.

Unfortunately, however, distortions were bred in the extremely protected environment that had been created. Our cost of production was high and productive efficiencies were low. There was no incentive to be competitive, and India remained, for much too long, a high-cost manufacturing country. In course of time, we were overtaken by some of the developing countries in Asia, which recently embraced the notion of free market forces. Thus, while India was far more industrialised than many other Asian countries (with the exception of Japan) through the 1940s, 1950s, 1960s and even into the 1970s, you will see that by the end of the 1970s, some of these countries began to get ahead at a pace far greater than what India was able to achieve in terms of industrial development. That came from the liberalisation of their economies, while we continued to be a controlled economy up till the early 1990s.

India took the cue in 1991, when comprehensive liberalisation of the economy was introduced. A number of impediments to industrial growth, like licensing, were reduced or eliminated. New fields were opened up to competition, particularly in the area of infrastructure and areas that had hitherto been reserved for the public sector. Consequently, what we have seen in this decade has been the considerable restructuring and modernisation of Indian industry, which is trying to be more cost-efficient and technologically advanced to face enhanced competition and globalisation.

Those companies that have either enjoyed monopolies or operated somewhat inefficiently through protection will find the new environment threatening. Those companies which are willing to change, willing to modernise and willing to restructure themselves, will find the coming years very rewarding. The demand growth in India is expected to be quite phenomenal, and for those companies that successfully make the transition to the new environment, there will be great opportunities.

ON R&D IN INDIAN INDUSTRY: I am afraid I am rather critical of the achievements of independent India in the area of industrial research and development. Almost without exception, industrial enterprises in the private sector have undertaken very little research. Most have adopted the policy of buying licences, operating through collaborations or reverse engineering products. Reverse engineering involves taking a product apart and replicating it, but without necessarily having a deep knowledge of the technology behind it. I firmly believe that if India is to take its place among the leading industrial countries, industrial enterprises will have to earmark a far larger amount of their profits than they have been doing for the development of new products and technologies.

Hot metal being poured into the convertor at the Tata Steel plant in Jamshedpur.-BY SPECIAL ARRANGEMENT

In contrast with the private sector, the Indian Government has invested enormously in various research laboratories belonging to it. These laboratories have sometimes undertaken quite interesting work, but I am afraid their motivation has primarily been to facilitate import substitution rather than undertaking frontier research.

On the whole, although India has used its research laboratories to create very many products, a proportionate amount of research time has not been devoted to new technologies or technologies of the future.

ON INDIA'S POTENTIAL: Consider this country and its capabilities. India is rich in natural resources. It has a population of more than 900 million people and, therefore, a large market. It has a middle class (the consuming class) that is now estimated to be between 100 million and 150 million. Its people have considerable talent and intellect. It is now recognised the world over that the pool of skilled and technical manpower that India has is higher than most people expected.

My view is that if we really set free the entrepreneurial spirit of our people, if, within a proper legal framework, we reduce the controls and restrictions, if we encourage enterprise, India will definitely be a major force in the industrial world.

ON POPULATION: A most impressive achievement of independent India, which tends to be accorded little recognition, is the fact that while India, at the time of attaining Independence, was unable to feed its 350 million people fully, India today, with about 930 million people, is self-sufficient, in fact surplus, in food.

We have enormously improved our capability to be self-sufficient despite the fact that our population has been increasing at a very high rate. But I am concerned about the fact that with our population increasing by about 18 million each year (which is equal to the entire population of Australia or Malaysia), the challenge for the India of the future is not whether it can become a successful industrial nation but whether it can provide food, shelter, education and jobs for 18 million Indians coming into this world every year.

Will the next generation really be able to find a place in society in the coming years? I think it is crucial that we have a growth rate - an industrial growth rate, a GDP growth rate - that will support the kind of population growth that we have. Simultaneously, we must take steps to control our population growth, primarily by educating our people and conveying to them the many constraints that large families can create.

ON THE FUTURE: I feel very enthusiastic about India's future. I think this is a very exciting time for India, and India is going to be a force to contend with on all fronts.

Yet this optimism must be tempered with concerns about political instability and uncertainty, inconsistencies and constant changes in government policies, as also ideological and personally motivated pressures that are brought to bear on various regional, communal and industrial groups. These cannot but hurt the country's progress.

As an Indian, I would hope that as we move forward, India can marshal its enormous strength and the power of its people, act as one nation and one people, subordinating personal, communal and vested interests to the task of building India into the kind of nation it can be. I hope that we will succeed in developing a strong sense of national unity and a strong sense of national purpose, so that our future generations can be proud of their legacy.

As told to R. Padmanabhan in Mumbai.

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