Press Release

Speech by His Excellency Mr. Shivshankar Menon, Foreign Secretary on “India’s Opportunities and Challenges” at the IISS-Citi India Global Forum 2008 (New Delhi; April 19, 2008)

 Dr. John Chipman, Ladies and Gentleman, I am honored to be here at the first India Global Forum organized by the International Institute for Strategic Studies, London and Citi Group. You have a most impressive agenda and list of speakers. I am sure that your conference will contribute to informing opinion on India’s future and its place in the world.

I would also like to convey apologies on behalf of Minister Pranab Mukherji. He had hoped to be with you and to deliver the keynote address, but unfortunately has to be away from the country at this moment.

I thought that I would speak to you today about India’s opportunities and challenges. You might ask why. In the last two decades, India and most of the world have gone through a period of unprecedented opportunities, which have transformed India and the world. It may be, however, that we have arrived at the cusp of a shift in the balance between opportunities and challenges, when challenges to the world system increase and the external environment is harder for us all, including India. In order to examine whether this proposition is true, let us look at how India and the world have changed, and at the opportunities and challenges that we face today. 

India Transformed

In the sixty years since India’s independence a plural and diverse national has built and consolidated a democratic political order and has achieved considerable success in its development tasks, both social and economic. Economic growth, modernization and the pace of technology driven change are transforming our society at an unprecedented pace. As a result of twenty five years of 6% growth, itself largely the result of reforms since 1991, India is today in a position to engage with the world in an unprecedented manner. Movements of goods, services, capital and people connect us more closely than ever to once distant societies. India is more linked with the world economy than it has been for centuries. Almost 50% of India’s GDP is accounted for by the external sector. Our needs from the world have changed, as have our capabilities.

However, daunting tasks remain. The two greatest challenges are poverty alleviation and inclusive development by sustaining growth and bringing its benefits to every strata of Indian society. If we are to eradicate mass poverty by 2030, we need to keep growing our economy at 8-10% each year. The recent change in India’s GDP mix has increased contributions from the industrial and service sectors; we need to ensure that our agricultural sector also achieves similar growth, particularly since a majority of our population still relies on agriculture. Our priorities include minimizing developmental disparities across regions and peoples, reducing illiteracy and removing social barriers, maintaining a healthy balance between urban and rural development and, ensuring infrastructure development. At a minimum, this entails the efficient use of our resources, including human resources, enhancing education standards, improving productive skills and harnessing science and technology to our development. These are essential to sustaining and boosting rates of economic growth. 

At another level, maintaining the current growth trajectory of India’s industry will depend on the ability to meet our rising energy needs. For this an effective energy strategy is necessary, combining augmentation with energy conservation. India’s imports of crude oil and petroleum products are unlikely to decrease any time soon. Our dependence on oil imports requires proper management so as to lessen their inflationary impact and preserve positive balance of payments, particularly given high global oil prices.

Equally, if growth is to be inclusive and serve the goals of social justice, food security becomes essential for India. I will return to these themes later.

The World Today

To successfully meet these challenges we also require an external environment which is conducive to India’s transformation and continued development. This remains the primary objective of our foreign policy. We have a vital stake in the promotion of an environment of peace and stability in our region and in the world, which will facilitate India’s accelerated socio-economic development, safeguard our national security, and lead to greater strategic autonomy. For the last two decades, conditions conducive to our quest did exist, generally speaking. And yet, when we look at the world around us, it seems less likely that this supportive environment will continue in the absence of concerted international effort.

Looking at the world from India, it often seems that we are witness to the erosion of the Westphalian state system and a redistribution in the global balance of power leading to the rise of major new powers and forces. Our shorthand for this phenomenon is the rather inadequate term “globalization”. Twin processes of globalization and economic inter-dependence have resulted in a situation where Cold War concepts like containment have very little relevance.

The interdependence brought about by globalization has put limits beyond which tensions among the major powers cannot escalate. What seems likely, and is in fact happening, is that major powers come together to form coalitions to deal with issues where they have a convergence of interests, despite differences in broader approach. In other words, what we see is the emergence of a global order marked by the preponderance of several major powers, with minimal likelihood of direct conflict amongst these powers. The result is a de-hyphenation of relationships with each other, of each major power engaging with all the others, in a situation that might perhaps be described as “general un-alignment”.

The international situation has facilitated the rapid development of India’s relationships with each of the major powers, and this is apparent in developments over the last few years. India’s relations with the United States of America have been transformed. They now span a wide spectrum of issues including high technology, defense, space, agriculture, education and trade and other linkages. It is our hope that civil nuclear cooperation with the USA and other friendly countries will become possible soon. Our strategic relations with Russia are rooted in a friendship that spans several generations and a relationship that straddles multiple areas of common interest. The India-Russia-China trilateral Foreign Ministers dialogue continues to be productive. With Japan, we are committed to strengthening our partnership. India shares a strategic partnership with the 27-member European Union, which is adding an increasing political role on the international stage to its considerable economic might. Through the IBSA forum, India is engaged with two leading emerging economies, Brazil and South Africa. 

Equally important have been two other necessary conditions which have given India space to work in: Due to India’s rapid economic and social transformation, our engagement with the global economy is growing rapidly. India can do and consider things that we could not do or consider twenty years ago. This is reflected in how India perceives its own future, its ties with its neighborhood and its approach to the larger international order. The second necessary condition which has obtained to a greater or lesser extent is our attempt to build a peaceful periphery within which India’s transformation can take place.

We will continue our efforts to develop close political and economic relations with all our neighbors. Our goal is a peaceful, stable and prosperous neighborhood. India will continue to remain a factor for stability and peace in the region. Our economic growth is having an impact in the region and there are increased opportunities for our neighbors to benefit by partnering India. We will continue to make unilateral gestures and extend economic concessions. The political challenge will be set aside past mistrust and suspicions which have restricted the expression of our natural affinities, based on shared geography, history and culture. 

The recent elections in Pakistan, Nepal and Bhutan have served to underscore the potential contribution of multi-party democratic frameworks to peace and stability. India will continue working with the new leaderships in these countries so as to enable each of us to pursue our shared objectives. It is our hope that the people of Bangladesh will also soon be able to choose their future and leaders through free and fair elections restoring full democracy. Our destinies in the subcontinent are linked, and will stay so. One major objective is therefore the establishment of better connectivity in the subcontinent, connectivity of the mind and physical connectivity. The resumption of rail links last week between India and Bangladesh after forty-three years is testimony to this commitment. At the 14th SAARC Summit in New Delhi last April, we set the goal of achieving in a planned and phased manner a South Asian Customs Union, a South Asian Economic Union, and a South Asian community. The popularity of such initiatives throughout the subcontinent indicates the strength of the impulse to remake these relationships. 

This desire is equally strong even where difficulties persist. The unfortunate increase in violence in Sri Lanka reinforces our consistent position that there can be no military solution to the ethnic issue. It is necessary to find a negotiated political settlement within the framework of a united Sri Lanka, one that is acceptable to all sections of society. We will continue to assist Afghanistan in whatever manner we can in its reconstruction and in building a pluralistic and prosperous society. Equally, a peaceful, stable and prosperous Pakistan, at peace with itself, is in India’s interest. We hope that Myanmar’s ongoing national reconciliation and political reform process would be successful. We recognize the need to expedite the process and make it more inclusive so as to ensure peaceful and stable democratization. Our relations with our largest neighbor China are hinged on the mutual recognition that there is space enough and opportunity for both countries to grow and prosper.

With ASEAN, India’s engagement has been different. It is a civilizational engagement. India’s “Look East” policy forms the pillar of our relations and substantial steps have been taken towards integrating our economies, societies and institutions. The most visible achievement has been to meet the bilateral trade target of US$ 30 billion a year ahead of schedule. Similarly, exports from ASEAN members continue to exceed expectations. An India-ASEAN fund with an initial corpus of US $ 1 million has been established and a proposal to establish an India-ASEAN Green Fund, with a corpus of US $ 5 million is on the anvil. I am optimistic over the future of this partnership. 

At the global level, India’s engagement is geared towards playing a positive role in world affairs. It is this thought and aspiration that lies behind our desire to be a permanent member of the UN Security Council. A strengthened, more democratic UN is a basic necessity of the new global order.

Opportunities

As this brief survey shows, the last few decades have translated into opportunities for India’s external relations in several significant ways. Can we expect this to continue? Certainly, India’s capacity to utilize the opportunities that may emerge is today far greater than it has been before. As we seek to build a knowledge society, the revolution in technology, annihilating distance and enabling us to leapfrog stages of development, offers a significant opportunity.

India’s growing economy, linked as it is to the world today, hopes to benefit from an open international trading regime, and requires an open rule-based international trading and investment environment. 

Challenges

Paradoxically, it is these same interdependencies which pose the likely external challenges of the foreseeable future. Today we are told that the prospects for the world’s largest economies, and for the world economy as a whole, are now cloudy. As one of the beneficiaries of globalization, India cannot be unaffected by a change in global economic prospects. India has a major interest in the success of the Doha Development Round, so long as it lives up to its name as a development round, and is true to its stated purpose of an open, predictable, rule based trading system. We will do what we can to make it a success, and to see that the concerns of countries such as India with large numbers of subsistence farmers are taken on board.

Two other recent developments that are worrying are the spurt in food and oil prices and their effects on energy security and food security. The world has yet to come to grips with these problems, and to deal with them on the basis of equity. The relationship between climate change and development is another such issue. India’s commitment is clear and fair. Our per capita green house gas emissions will not exceed those of the developed countries, even as we continue to seek to develop our economy.

Let us look at energy and climate change in a little more detail to understand why India adopts this approach: 

For India clean, convenient and affordable energy is a critical necessity to improve the lives of our people. The average consumption of electricity per capita each year in India is currently only 550 kWh against a global average of 2430 kWh, a US average of 13070 kWh and a Chinese figure of 1380 kWh. At a projected growth rate of 8% a year through 2031-32, the minimum necessary to eradicate poverty, India needs to increase its primary energy supply by 3 to 4 times, and its electricity generation capacity by 5 to 6 times current levels. Even though we have been growing by over 8% there has been effective decoupling of our GDP growth from energy consumption and we have not followed the energy intensive growth pattern seen in the OECD. Our present energy generation inputs are predominantly thermal. We have abundant coal reserves which can be better utilized through cost effective solutions and clean-coal technologies.

Linked to energy security is the challenge of dealing with climate change. The international community already has instruments to deal with the challenge of climate change in the form of the painstakingly negotiated UNFCCC and the Kyoto Protocol. More than 50% of GHG emissions are currently from OECD countries. India with 17% of the world’s population accounts for only 4% of such emissions. And yet the adverse effects of global warming caused by accumulated and continued high emissions by industrial countries will largely be felt by developing countries. These unsustainable patterns of consumption and production must be tackled on an urgent basis. It is imperative that the developed countries in Annex 1 of the Kyoto Protocol urgently commit themselves to truly higher levels of GHG reductions. The true free-loaders are those who have used up the world’s carbon space for their own development and want to keep occupying it. 

By mentioning energy and food security, I do not mean to minimize the risks from traditional political complexities. In addition, fresh and major causes for worry are the changing nature of international security threats, such as terrorism and the proliferation of weapons of mass destruction, and the possible link between the two. India is ready to work with others to evolve a new international consensus to deal with these life and death issues. We believe that non-proliferation and disarmament are mutually reinforcing processes. The most effective non-proliferation measure would be a credible program for global, verifiable and non-discriminatory nuclear disarmament, as reflected in the Action Plan presented by the late Prime Minister Rajiv Gandhi in 1988. In this the 20th anniversary of the Action Plan it would be fitting to renew joint efforts for general and complete disarmament, particularly nuclear disarmament.

In sum, the factors which threaten systemic stability come from larger crosscutting or transnational issues: food security, energy security, climate change and the environment, terrorism and the proliferation of weapons of mass destruction. As the world globalizes, technology ensures that these threats also globalize. No single country can deal with these issues alone, and they require fair and equitable global solutions which involve us all. 

Conclusion

All in all, it is probably too early to come to a definite conclusion that challenges now outweigh the opportunities in the international arena. But the signs are that they will do so if we do not rapidly address clear and present elements of instability, and reform global governance and institutions to make it possible to do so equitably and efficiently, involving all those who can contribute to solutions. At the same time, in the near term, the continuing primacy of India’s domestic developmental tasks and challenges likely means that the fundamental tenets underlying India’s global engagement, of benign and cooperative engagement, will continue.

Home