Sunday, September 27, 2009

ABDUL KALAM'S SPEACH

Address to the 2007 batch of the IAS Officer trainees Lal Bahadur Shastri Academy, Mussoorie, 16 June 2009

Integrated efforts by Collectors and District Administrators vital for national development
Ignited mind of the youth is the most powerful resource
on the Earth, under the Earth and above the Earth.
Friends, I am delighted to be with you all, the young IAS Officers, who will soon be taking important assignments in the national scenario.
I remember my own younger days in Rameswaram when the whole village used to look with awe the “Collectors”. The post of collectors first created in 1772 as the focal point of revenue administration, has gone through several transformations over the years. I have always perceived the role of Collectors as integrators, who understand the total chain of development from policy to beneficiary. They particularly provide the last mile connectivity to development facilitating enhanced quality of life to the citizens. During my professional career and now, I have come across many distinguished IAS officers, and particularly many energetic, passionate young collectors and commissioners, who have impressed me with their skills and result orientation. With such a pride of place, what else can be the guiding spirit of young IAS officers other than being a partner in realizing the vision of the nation. So young friends, you have a well designed goal in front of you and you can make a difference to the nation through your performance. My greetings to all of you.
As I see your bright eyes with a deep desire to perform, let me visualize a scenario in a remote North Eastern PURA (Providing Urban Amenities in Rural Areas) cluster in about three years. Being a hilly area, with physical infrastructure still coming up, the tele-education and telemedicine enabled by ISRO is considered a great boon by the empowered youth and children. The research work done by CSIR laboratories for converting the local resources into products for use by the local population and exporting them is greatly welcomed by the local population. The richness of the north-east craftsmanship is supported by technologists for increasing their productivity and aesthetic qualities. The village knowledge centres set up in collaboration with IT, Space and NGOS add value to the earning capacity of this place. The Earth Sciences and Department of Science and Technology with their research in bio diversity, climate research have used the cluster as a working platform for mutual benefit. The Agricultural Ministry has enabled the scientists to work with local farmers to bring innovations in agriculture. The Dept of Bio-technology has enhanced the production of silk from silk worm through the application of bio-nano-technology . The new and renewable energy sources department has paved the way for bio fuel and solar power. The tourism department has modernized the infrastructure and multiplied the Indian and foreign tourists visiting northeastern states. The energy of the young professionals from Indian Institute of Management and other institutions adds to fresh innovative ideas of entrepreneurship. The web site of the PURA gratefully presents this successful experiment of public-private- citizen partnership. And these remarkable accomplishments are made possible by the district administration led by one of you, by transparent governance and community friendliness, with the maximum use of technology and with the effective coordination among citizens, technologists, people representatives and state government organs, And I see similar situations in several rural clusters in different parts of the country.
Hence the topic I have selected for discussion today is “Integrated efforts by Collectors and District Administrators vital for national development”.
Friends, yesterday I studied the IAS training canvas. After the foundation course, you have undergone IAS professional course-I. Subsequently, you have had the benefit of state and district training which included study of the villages and your analysis. Through this process, I am sure, you have become fully aware of, what are the problems and challenges in the district. Now, in the second phase, you will reflect on and synthesize the knowledge and skills so far acquired. My talk today is designed to provide certain pathway for you.
Friends, I have structured my talk in five parts. First part, I would like to discuss with you, what type of mission or the task, each one of you will be remembered for. I will give certain suggestions. Each one of you will have to evolve. In the second part, I will present a visualization of India by the year 2020 and the integrated action needed. In the third part, I will give few case studies in agriculture, education, healthcare and the IT sector which will help you when you face some problem in your district. In the forth part, I will explain, how integrated rural development is possible through a system called PURA (Providing Urban Amenities in Rural Areas). Actually the PURA indeed is a very important mechanism for progressing India towards an economically developed nation. Another important area, I would like to highlight is about the necessity of “National Campaign for Eradicating Terrorism”. During the presentation of these four areas, I will be highlighting certain relevant experiences, so that, you will know the progress and problems in the national development process. In the last seven years, I have met 5 million youth and many more experienced. I have seen that the people of the nation can be inspired, motivated and committed to work only through a Vision for the Nation. In conclusion, I will talk about the transformation in thinking process of the youth which has occurred in a decade. Today, youth have reached a stage to say “I can do it”. This is a very important foundation for the nation.
What you will be remembered for?
I visualize a scene “What the IAS officers of 2007 batch will be remembered for?” Will you be remembered for a visionary action for the nation? Some of the suggestions for you, are:
1. Will you be remembered for becoming the pioneer in increasing access to water by operationalizing all the existing water bodies by desilting and establishing the links and generating the new water bodies.
2. Will you be remembered for giving leadership to interlinking of rivers in the nation?

3. Will you be remembered for revitalizing or revolutionizing in your district, the integrated Primary Healthcare Centre as a Public-private- partnership?

4. Will you be remembered for working and creating a scheme in partnership with agriculture research institutes, extension workers and farmers for doubling output of food-grains in your district and thereby increasing the per capita income of each of the farmers?

5. Will you be remembered for ensuring that dropout from schools in your district reaches virtually to zero through your innovative actions?

6. Will you be remembered for making your district a fossil fuel free district? That means, villages in your district will transformed into bio-wind-solar villages.

7. Will you be remembered for the action oriented – “Clean home, clean villages and clean district, that will lead to clean state and clean nation?

8. There is a Lead India 2020 Movement in the country where the school students (10+2) are being trained by teachers on good way of life, importance of hard and honest work and parental care. It has tremendous influence on the youth. Will you be remembered for spreading this movement in your district?

9. Will you be remembered for establishing number of PURA complexes (Providing Urban Amenities in Rural Areas) in your district? This will provide physical, electronic and knowledge connectivity leading to economic connectivity that is enhanced earning capacity of the rural citizens.

Some of you would be taking up, the leadership role in the crucial areas of national development. Above all, you will agree with me, all the above events we should realize based on the principle “work with integrity and succeed with integrity”.
Evolution of vision 2020
Let me share with you my experience in mid 1990’s on formulation of Indian vision 2020 strategies. I was given the task of chairing Technology Information Forecasting and Assessment Council (TIFAC). I recollect, that in the first meeting of the Council itself, we took a decision that TIFAC must evolve a plan how India can be transformed into an economically developed nation by the year 2020. When the suggestion was mooted everybody was wondering how we can evolve such a long term mission under the then prevailing economic and social conditions of the country. That was the time; the then Prime Minister had just announced the economic liberalization and growth measures for the Indian economy and its impact had just started being felt.
In spite of this, the council with many young members jumped into the idea and we discussed for one full day on how we can translate the thought into action. At a time when the economy was growing at around 5 to 6% per annum in GDP we had to envisage a growth rate of at least 10% per annum consistently for over 10 years for realizing the development vision of billion democratic people of multi lingual, multi religious and multi cultural characteristics. This really ignited the minds of all of us in the council. The members of TIFAC Council at that time included: Principal Secretary to the Prime Minister, Nine Secretaries to the Govt of India, Chiefs of CII – ASSOCHAM and FICCI, Chairman of IDBI – ICICI - IFCI, Chairman of Public Sector of Corporations and Chief Executives of number of Private Sector Institutions, Vice Chancellors of different Universities and Scientists from DST. We debated and arrived at 17 task teams with over 500 members who had consultations with over 5000 people in various sectors of the economy. Committees worked for over two years resulting in 25 reports which we presented to the then Prime Minister of India on 2 Aug 1996. I have selected 5 Task Team reports for your study and it will be available in your library. The reports included Vision on areas such as agro-food processing, advance sensors, civil aviation, electric power, waterways, road transportation, telecommunications, food and agriculture, engineering industries, healthcare, life science and biotechnology, materials and processing, electronic and communications, chemical process industry, services, strategic industry and driving forces - impedances. Transforming India into a developed nation implies that every citizen of the country lives well above the poverty line, their education and health is of a high standard, national security assured and core-competence in certain major areas enabled production of quality goods competitively including for exports, bringing all-round prosperity for the countrymen. This event led to the birth of the book “India 2020: a Vision for the New Millennium”. Based on various inputs, the government announced the vision statement that India will become a developed nation by 2020. Such a statement is very rare, since every government is elected only for a period of five years and thinking of over 20 years time frame by the Parliament and the government set a new precedence for the country. Now let me present the current ambience of the nation.
Current Ambience in India
Indian economy was growing at an average of 9% per annum till the last year. Now this year, Indian economy has got affected due to global economic turbulence. I had discussions, on this subject, with experts at IIM Ahmedabad during my teaching assignments. It came to light that the Indian economy will be less affected due to the world financial crisis. This is due to (i) The liberalization process in India has its checks and balances consistent with the unique social requirements of the country. (ii) The Indian banking system has always been conservative which has prevented the crisis (iii) The Indian psyche is generally savings oriented and living within means is part of the mind set. These three causes have reduced the effect of global turbulence in the Indian economy. However, there is reduction in export and reduction in outsourcing. The drop in annual growth rate of GDP could be around 2 to 3%. This is the time we need innovation in our thinking to rejuvenate the agricultural sector particularly through value addition and the small and medium scale industries and enterprises for making higher levels of contribution to the GDP, particularly in the Agriculture, integrated Rural development through PURA (Providing Urban Amenities in Rural Areas) which I will be discussing later. I foresee possibilities of creating new markets through rural potential and employment, giving rise to interesting possibilities of Public-Private- citizen partnerships. Your innovative ideas will be called for creating such partnership in the fastest mode with effective results.
Friends, I would like to present you a visualization of India by or before 2020. There are ten missions, you will find during your assignment as a district functionary, with challenges, therefore great opportunities for you to contribute in most of the missions.

Visualization of the nation in 2020
1. A Nation where the rural and urban divide has reduced to a thin line.
2. A Nation where there is an equitable distribution and adequate access to energy and quality water.
3. A Nation where agriculture, industry and service sector work together in symphony.
4. A Nation where education with value system is not denied to any meritorious candidates because of societal or economic discrimination.
5. A Nation which is the best destination for the most talented scholars, scientists, and investors.
6. A Nation where the best of health care is available to all.
7. A Nation where the governance is responsive, transparent and corruption free.
8. A Nation where poverty has been totally eradicated, illiteracy removed and crimes against women and children are absent and none in the society feels alienated.
9. A Nation that is prosperous, healthy, secure, devoid of terrorism, peaceful and happy and continues with a sustainable growth path.
10. A Nation that is one of the best places to live in and is proud of its leadership.
Integrated Action for developed India
To achieve the distinctive profile of India, we have the mission of transforming India into a developed nation. We have identified five areas where India has a core competence for integrated action: (1) Agriculture and food processing (2) Education and Healthcare (3) Information and Communication Technology (4) Infrastructure: Reliable and Quality Electric power, Surface transport and Infrastructure for all parts of the country and (5) Self reliance in critical technologies.
National Development Scene
I am confident Indian capability exists for realizing the India Vision 2020 profile. How do I say this? It is born out of my experience in my professional career of last 50 years, where organizations with integrated thinking have achieved state-of-the- art systems. What is now required for India Vision 2020 profile “Management for the billion”, what it can be? That means we have to create innovative management systems and creative leadership in every segment of development so that missions planned are completed in a time bound manner to the full benefit of every citizen of the country. All aspiring administrative professionals have great opportunities and challenges. Let me now describe some case studies in agriculture, health and education. I will also present an integrated rural development experience with focus on employment generation.
Agriculture
In the agriculture and farming sector, more than doubling the productivity of Rice and Wheat in areas near RP Channel-5 in Bihar has been achieved through the TIFAC mission using innovative integrated farming and marketing methods. This has been achieved by agricultural scientists working with Paliganj farmers. These results have spread to many areas through people’s efforts and are applicable to the whole of Bihar, Eastern Uttar Pradesh and other areas which have similar agro-climatic conditions. These regions could be transformed into the granaries of India.
I have come across similar success stories in respect of doubling seed cotton productivity in Punjab, when I visited Gheri Buttar village, where I met farmers. Also in the field of sugarcane cultivation, in Maharashtra, the intervention of the Vasant Dada Patil Sugar Institute, Pune has enabled farmers to increase the yield of sugarcane by 36 percent. This experience can definitely be emulated by other sugarcane growing States. Our private sector has also made significant progress in food processing industries, whereas there is a need for Rural Farmers’ Cooperatives in partnership with banking institutions, on the pattern of the Indian Farmers Fertilizer Cooperative Limited. I have seen during my visit to Mizoram in the North Eastern States, almost every house is being equipped with self-contained water harvesting systems, which provides adequate water supply through out the year. These success stories clearly indicate that it is feasible to enhance food-grain output from the existing 230 million tonnes per annum to nearly 360 million tonnes per annum before 2020. This will also help in drastically reducing the number of people living below the poverty line - a true indicator for an economically developed nation. Now I would like to touch on water harvesting.
Project Siruthuli – revitalizing a water body
This is an initiative started by Coimbatoreans for Coimbatoreans in Tamilnadu. This ecological project aims to bring back the glory of Coimbatore and its rich heritage. The project is represented by people from all walks of life and professionally organized. The primary focus is on large scale rain water harvesting, afforestation, sewage / waste water treatment and solid waste management. They have already standardized five of the nine primary tanks in Coimbatore for large scale rainwater harvesting. They have planted trees on the bunds of the de-silted tanks and are being maintained. They have planted over one million trees. The comprehensive study has indicated outlet of the city sewage as 10 million liters per day. A pilot plant is being taken up for sewage treatment to treat one million liters per day. The treated water is being used by agriculturists and industrialists. The garbage and debris to the extent of over 26,000 cubic meters in one of the city’s largest tank have been removed. This model can be replicated throughout the country.
The message I would like to convey here is: “The farmers, agriculture scientists, social reformers, industry and the institution worked together had doubled the food production in simply managing the existing environment with system oriented approach in agriculture”.
Education
Now I will discuss certain innovative models in the education sector which I have seen. They use creative learning methodologies that emphasize learning by doing including cultivation of hygiene, nutritional and sanitary practices. One such programme is being conducted by Dr. M.R. Raju and his team in Pedamiram, Andhra Pradesh. Dr. MR Raju’s work attracted the villages citizens to send their children for schooling in large numbers.
At the primary and secondary school level, Government Municipal Schools in Karnataka have introduced the accelerated learning model using computer based animated courses. This was pioneered by the Azim Premji Foundation which has brought down dropouts from schools substantially. NCERT has prepared the National Curriculum framework under Prof. Yashpal’s leadership (Great communicator of science) and modified the CBSE syllabus for promoting creative education at all levels through the application of learning by doing concept. Teachers training programmes based on the new syllabus of CBSE, has been organized across many cities using EDUSAT through video-conferencing. Thousands of teachers have been trained so far through interaction with experts sitting in the NCERT Studio in New Delhi.
I witnessed the Ladakh Model of Sarva Shiksa Abhiyan increasing the pass percentage at the 10thclass level from 5 percent in 1998 to 50 percent in 2005 with the aim of promoting creative learning leading to higher percentage of passes in the Phase II programme. I have asked them to increase the pass percentage to 80% by 2009. The Akshya Programme of the Kerala State Government is imparting computer education to 6 lakh adults and advanced computer training programme for 60,000 youth within a two year period leading to high value employment for the youth in Malapuram District. Now it is spreading to all the other districts of Kerala.
E-learning Content: I would like to share with you highlights of CII-Shiksha (www.shikshaindia. org) which is a free programme helping schools and teachers use technology for their teaching and learning. The Shiksha movement aims to help teachers to not just use readymade content but also become resource creators. More than 3000 schools have been provided the Shiksha content. Over 10000 teachers have access to the free Shiksha content. During the last 8 months over 1000 teachers have been trained in various Open Source e-teaching based software and this number is growing. The free Shiksha Portal, can be accessed from this web portal:www.eshikshaindia. in, I also inaugurated a similar programme called Sakshat. This programme is specially designed by the Ministry of Human Resource Development to help the students to learn that entire syllabus of 10+1 and 10+2. The online answering system for the questions by students. You may access this from www.sakshat. ac.in.
In higher education, a pioneering effort by the Universities of Madras, Mumbai and Kolkata with the help of the Ministry of Human Resource Development has resulted in the creation of a Virtual University system by offering ten joint degree programmes at under-graduate, post graduate and Ph.D. levels. In the higher education system throughput has to increase from the existing 6 percent to 30 percent by 2020. I am very confident that such initiatives, when applied across the country in the total education system will enable us to realize near 100 percent literacy and employable skills among youth, leading to a Knowledge Society by the year 2020.
The message is:
1. The total literacy in the country and empowerment with world class skills and higher education will need intensive Public-Private- Partnership” .
2. The right to education bill has to fructify leading to the provision of free and compulsory quality education to all children up to the age of 14.
3. We need to give quality school input to get quality higher education output.
4. For building a knowledge society – primary education is the important foundation, which needs a unique institution for focusing creativity for primary education with intensive training to the teachers.

Creation of Global Human Resource cadre
I visualize the nation to have two national human resource cadres: (1) knowledge professionals with higher education to take up leadership roles in research, development, education and industrial missions and (2) skilled youth with specific world class technical skills. This global human resource will meet the needs of quality human resource for India and for the whole world. It is a big and challenging mission for the district authorities.
Quality healthcare for all
Let me now narrate some of the innovative initiatives in medical care for the unorganized sector. During the last three years in Karnataka, a unique corporate healthcare medical scheme is in operation, under the leadership of doctors of the Narayana Hridyalaya in partnership with the Karnataka Government. This is benefiting over two million members, like farmers, craftsmen, artisans, and small vendors. Members of this scheme, who pay a nominal subscription of Rs. 10/- per month per individual, receive full medical treatment for major ailments, major surgeries, entirely free of cost. Such medicare scheme for people below poverty line has been introduced in state like Andhra Pradesh. One of the challenges for medical care is making the PHCs to work which are distributed in the rural areas. How the Karnataka model of the healthcare scheme can be spread in all the parts of the country is indeed another important challenge for the nation.
Medicare with compassion
I have come across a number of humanitarian missions giving free treatment to the poor, among them for example the Little Heart Foundation for children’s heart ailments, Care Kidney Foundation for kidney ailments at Hyderabad and the Paterson Cancer Centre at Chennai for cancer treatment. There are several other initiatives of this nature showing the indomitable spirit of doctors, nurses and para-medical staff. For example, Karunya Nilayam has initiated the process of screening of children in rural areas of Kerala so that they can provide total treatment to over a hundred cancer affected children every year free of cost. The Arvind Eye Hospital, Madurai provides free treatment to 70% of the patients. We need to multiply such ventures to enable every citizen of the country to receive quality healthcare. As a spin off from India’s missile technology, came light weight calipers. These calipers have been field proven through a number of camps, spearheaded by the Nizam Institute of Medical Sciences, Hyderabad. This has so far benefited more than 10,000 polio affected children across the country. Mobile clinics are being increasingly deployed in the remote areas of Uttaranchal and other hilly regions for providing quality diagnostic and healthcare services to needy villagers. Space technology has been extended to the healthcare sector. 34 specialty hospitals have been connected through ISRO’s tele-medicine network and are providing tele-medicine services to over 140 remote locations all over the country.
The message I would like to convey here:“Innovative management models in healthcare services are required to outreach the medical services to the people with affordability and quality”.
Next let me focus on the IT Sector.
IT sector
In the financial year 2008-09, the IT exports have crossed US$ 47 billion. The total revenue including domestic market is 60 billion dollars. We have to find a faster growth of this sector which will need creation of an environment for nonlinear growth which is essential for targeting 20% of the total world IT spend (from the $1 trillion) from the present 4% share of IT and ITES Indian companies. Strategies are required to be worked out for realizing such a growth within the next 3 to 5 years by young leaders like you who will be joining the industry very soon. This can be done through innovation and creativity for transforming India into a knowledge economy.
Many State Governments are in the process of implementing e-Governance services and creating State Wide Area Network across their States. I am happy to say that the Ministry of Communication and Information Technology has invested around Rs. 24,000 crore for establishing an e-governance network and Government to Citizens Services across the country within four years time. It also includes establishing of 100,000 common service centers. Through capacity building, job opportunities, better consumer protection laws and secure infrastructure, ICT would enable economic growth to higher levels of prosperity in India.
The message I would like to convey here is: “IT sector has to graduate into Knowledge System powerhouse”. It will result into value added products and systems with innovations.
Integrated rural development through PURA
Next let me focus on the sustainable development model for the rural areas where 70% of the people live in 600,000 villages.
Periyar PURA (Tamil Nadu): I have inaugurated the Periyar PURA Complex pioneered by Periyar Maniammai College of Technology for Women, Vallam, Tanjore consisting of a cluster of 65 villages having a population of over one lakh. This model PURA complex has all three Connectivities - physical, electronic and knowledge - leading to economic connectivity. This has resulted in large-scale employment generation and creation of a number of entrepreneurs with the active support of 1150 self-help groups. Two hundred acres of wasteland has been developed into a cultivable land with innovative water management schemes. Villagers are busy in cultivation, planting Jatropha, herbal and medicinal plants, power generation using bio-mass, food processing with dedicated marketing centers. This model has emanated independent of any government initiative. I have also seen the other PURA models like the Loni PURA in Maharastra, the Chitrakoot PURA in Madhaya Pradesh and the Byraju PURA in Andhra Pradesh. Byraju PURA has enabled the reverse migration of ICT BPO professionals from Hyderabad to Beemavaram. It has also enabled empowerment unemployed youth with quality skills. These experiences can be emulated nation wide. We need 7000 PURAs all over the country. This movement can be multiplied by thousands of entrepreneurs, educational administrators, small-scale industrialists and bankers with the support of government agencies providing total economic prosperity to rural India by 2020.
The message here is: PURA is an integrated sustainable rural development programme with the focus on employment generation through rural entrepreneurship by providing physical, electronic, knowledge and economic connectivity. PURA is a tool for bridging the Rural – Urban divide.
Dear friends, now I would like to discuss, for uninterrupted economic development peaceful environment is essential. Particularly terrorism or other extremist movements have to be managed effectively. While I believe, when we focus on the intensive inclusive economic development which is one of the deterrents for terrorism, we have to strengthen the mechanisms for tackling the terrorism effectively. Recently I have given a solution, it is called mission NCET.
National Campaign for Eradication of Terrorism (NCET)
I realize that the all forms of extremism have to be condemned. To sustain the economic progress of the nation and to achieve of India Vision 2020, assured safety and security of the people is of paramount importance. I have been thinking of the agony of the people who have experienced, particularly the kith and kin of families who were directly affected by extremist actions. The dynamics of the intelligence should be understood in the right sense at the right time by the intelligence agencies and nip it in the bud. Information collection has to be followed in multi-pronged approach through manual, remote observation, movement of information floating through internet and media. Vulnerabilities need to be identified by an unified approach. Disjointed intelligence reports will not serve the purpose. Hence we need a unified and empowered intelligence mechanism with task forces under a single roof at the centre which will act in a mission mode to tackle the terrorism.
I believe, time has come, apart from our multiple agencies forecasting and handling of the terrorist activities, we need to evolve an aggressive Mission called National Campaign to Eradicate Terrorism (NCET), with mission oriented integrated management structure, duly passed as a Bill by the Parliament.
Under the NCET Bill, we need to bring out the following:
1. Creation of unified intelligence Agency across the country, empowering them to deal with the State and Central Government intelligence agencies under one roof of administration with the latest technological tools and devices.
2. Enact a law which will provide stringent punishments and faster justice to the perpetrators of the crime in a time bound manner.
3. Create a sense of awareness among the people to work together in identifying these incidents and eliminating these tendencies with transparent procedures to inform the intelligence agencies and work with intelligence agencies to combat the terrorism.
4. Implement National Citizen ID card for all the transactions with the Government services, Business services and private services at the earliest.
5. Equitable National development for inclusive growth: Central and State Governments should reorient their administrative mechanisms to ensure that the development reaches all sections of the society equitably for achieving inclusive growth and ensure that none in the society feels alienated socially, economically and politically.

I am suggesting the evolution of NCET Mission to be around action oriented people of highest integrity and competence drawn from multiple functional areas, including students and faculty members from universities committed to the vision of NCET to eradicate terrorism as a time bound mission. We must do this with a great sense of urgency for“When evil minds combine, good minds have to work together to combat”. Hence the mission of NCET.
Conclusion
Dear friends, I have seen day by day how the India Vision 2020 definitely inspires particularly the youth of the nation. Now I recall a situation in 1990 beginning when I was interacting with the youth of Ahamedabad, one girl asked me “When I can sing a song of India?” The same spirit echoed everywhere during that time. But during the last 3 years, while interacting with the youth, I could hear a different voice. “What can I give to the nation?” But today, during the last one year, I have seen yet another transformation among the ignited minds of the youth that the spirit of “I can do it”. What a great transformation in the young minds and the experienced people of India. So the boundary conditions for development are in place. I am sure, dear students of my class, definitely you can become partner in the national development with the message that “I can do it”, “We can do it” and “India will do it”.
Friends, for us to fulfill the vision of developed India 2020 as a prosperous, safe and noble nation following the best traditions of democracy, the integrated efforts at district administration is crucial. You have thus a great opportunity. My best wishes to all of you in all your endeavours towards this goal.
Dear friends, now I would like to recall the Maharishi Patanjali of Yoga Sutra, who said: "When you are inspired by some great purpose some extraordinary project, all your thoughts break their bonds: Your mind transcends limitation, your consciousness expands in every direction, and you find yourself in a new, great and wonderful world. Dormant forces, faculties and talents become alive, and you discover yourself to be a greater person by far than you ever dreamed yourself to be."
My best wishes to all the participants of 2007 batch IAS Officers success in their national development mission.
May God Bless you.
Oath for IAS trainees

1. I will work for bridging the rural and urban divide of my district.
2. I will make my district 100% literate during my tenure.

3. I will ensure that the quality healthcare is available to every citizen of my district and MMR (maternal mortality rate) and IMR (infant mortality rate) will be below 10 per thousand.

4. I will ensure, value added non-farm jobs are available to rural citizens depending upon their qualifications and experience.

5. I will ensure that all the water bodies in the district are desilted with proper inlet and outlet connections and the water bodies are interconnected.
6. I will ensure equitable access of water and energy to all the citizens of the district and I will make my district a green district using maximum renewable energy.
7. I will ensure that my district is a transparent and crime free district.

8. I will ensure that the farmers in my district get quality seeds, quality fertilizer and quality pesticide in-time alongwith the knowledge of best technology for farming to ensure constant increase in productivity.

9. I will make my district a model district where there will be reverse migration from urban areas.

10. I will work with integrity and succeed with integrity.

Sunday, June 14, 2009

THE ECONOMIC HISTORY ANDTHE ECONOMY OF INDIA

THE ECONOMIC HISTORY ANDTHE ECONOMY OF INDIA
· The Roots of Indian Culture
· Linkages of Sumer, Dilmun and Mohenjo-daro
· The Advanced Culture and Technology of Ancient India
· The Indianization of Southeast Asia and Indonesia
· The Moghal Empire
· The British Raj
· The Economic System of India
· Economic Reform in India As Of 1995
· Economic Reform in India As Of 1997
· Regional Economies
· Population Density
· Historic Problems of Calcutta
· Economic History of Mumbai (Bombay)
· Economic History of Delhi, Old and New
· The Narmada River Project
The Economic System of India
Before the last decade, the 1990's, India was probably on the short list of almost every economist outside of India of the countries with the worst economic systems. India had and probably still has a parasitical class of politicians and bureaucrats that micromanage the economy in the interests of their class. They hypocritically aver that they are doing what they are doing in the interest of the people of India. There has been some official allegiance to socialism with a goal of achieving it through Stalinist central planning. The fact that the result has been some horrible mixture of state capitalism and moribund corporatism is usually attributed to incompetence and ineptitude on the part of the bureaucracy. The Indian American economist Jagdish Baghwati of Columbia University remarked that he agreed with the view that "India's misfortune was to have brilliant economists: an affliction that the Far Eastern super-performers were spared." The policies implemented by the Government of India before the last decade were brilliant only in maintaining the power and influence of the bureaucrats. Judged with respect to an promoting the welfare of the Indian people those policies were ridiculously bad, to the point of stupidity.
The bureaucracy has been rather competent in generating excuses for the failure of their policies. One of those exceuses has been that there is a Hindu rate of growth that is significantly lower than the rate of growth that other countries could achieve. What the bureacrats dare not say is that in maintaining a pool of economic rents the bureaucrats' policies were an outstanding success.
The disappointing economic progress in India up to 1990 cannot be attributed to any shortcoming in talent among the Indian people or the impediments resulting from Indian cultures. Indians out from under the oppression of the bureaucracy of the Indian Government have succeeded spectacularly in professions and business.
Probably the misguidance of India development can be attributed to India's first prime minister, Jawarharlal Nehru. Nehru chose the goal of economic self-sufficiency with economic development to be achieved by central planning modeled on that of the Soviet Union. By cutting off imports India gave a protected market to domestic producers. India got domestic production but it was production of low quality, obsolete products. The policies stifled economic growth and India, with its high level of population and poverty, could ill afford low rates of economic growth.
The two makes of automobiles produced in India, copied from models of the British Austin and Hillman of the 1950's, remained unchanged for more than forty years.
The planning and adminstration of the economic did not emerge full blown. The first five year plan (1951-55) called for the planned development of only a few industries, the ones that private industry had not developed for one reason or another. In the first five year plan the other industries were left to the market.
The second five year plan (1956-1961), the product of P.C. Mahalanobis' work, was more inteventionist. It tried to implement the elements of British socialism and combine them with the tenets of Mahatma Gandhi. It sought to eliminate the importation of consumer goods, particularly luxuries, by means of high tariffs and low quotas or banning some items altogether. The large enterprises in seventeen industries were nationalized. License were required for starting new companies, for producing new products or expanding production capacities. This is when India got its License Raj, the bureaucratic control over the economy. Not only did the Indian Government require businesses get bureaucratic approval for expanding productive capacity, busineeses had to have bureaucratic approval for laying off workers and for shutting down. When a business was losing money the Government would prevent them from shutting down and to keep the business going would provide assistance and subsidies. When a business was hopeless an owner might take away, illegally, all the equipment that could be moved and disappear themselves. In such cases the Government would try to keep the business functioning by means of subsidies to the employees. One can imagine how chaotic and unproductive a business would be under such conditions.
Government planning also involved requiring businesses to produce in particular areas, usually economically backward areas. It also might require the production of certain goods such as cheap cloth for the poor.
The Indian Economic Plans had to be financed and this often meant taking resources away from agriculture and giving them to pet industries that were not viable on there own. Ultimately this meant starving agriculture to feed inefficient industries the Government favored. Such a program was not likely to alleviate poverty and so in 1971, under Nehru's daughter, Indira Gandhi, the Government tried to eliminate poverty by promoting small, labor intensive enterprises.
The net effect of the Government programs was to take away resources from agriculture in the countryside to give it to favored businesses in the cities. When the effects on agriculture and the countryside became significant the plan added programs to help the countryside (labor intensive small businesses) and programs to aid agriculture such as a fertilizer subsidy. These programs to help agriculture and the countryside generally came from resources which the Government took away from agriculture and the countryside. The fertilizer subsidy may have been of greater benefit to the wealthier farmers than to the poorer farmers.
India's output did grow but not as much as did that of other countries in the region. The Government of India generally takes credit for growth, but when India's performance is compared to that of other countries one sees that the Government's contribution to growth was negative. The followi shows the magnitude of the shortfall in growth that India's oppressive system is responsible for.
Comparative Growth Ratesof Developing EconomiesAverage Annual Rates 1960-88
Country
IndustrialProduction
GDP

1960-1980
1980-1988
1960-1980
1980-1988
South Korea
15.2
12.6
8.8
10.1
Taiwan
12.8
7.2
9.6
7.4
Singapore
12.1
4.5
9.2
6.9
Hong Kong
10.3
7.5
9.9
7.4
Thailand
10.3
6.6
7.4
6.5
Indonesia
8.9
5.1
5.9
5.7
Pakistan
8.0
7.2
4.4
6.3
Malaysia
9.6*
6.1
7.9*
4.6
India
4.6
7.6
3.5
5.4
Bangladesh
6.1
4.9
5.8*
3.5
Sri Lanka
5.3
4.4
5.2
3.9
Mayanmar
4.2
7.3*
3.5
3.3*
* - 1970-1980
Source: The Economist May 4, 1991, Survey page 7
With the top performers achieving a growth rate of industrial production of about ten percent while India achieved a growth rate of only at most about five percent the cost of the License Raj to India's growth rate was about five percent, or half the rate of growth.
One of the most wonderful things to happen to the world was the genetic development of high-yielding grain varieties, the Green Revolution. This development probably put an end to famine from natural causes. Between 1970 and 1989 agricultural production in India did grow but the rate of increase was only 2.1 percent per year whereas over the same per period the annual rates of growth of farm output in Indonesia, Malaysia, the Philippines and Thailand were 3.7%, 4.7%, 3.6% and 4.5%, respectively. Again the cost of the License Raj to growth in India was about half the rate of growth. The cost of the License Raj more importantly is in the slower pace of alleviating poverty.
The License Raj in Action
The success pattern of development in Taiwan and other nations of Asia has involved cultivating export industries. In the case of Taiwan the first export industries were associated with agriculture, such as processing sugar cane into sugar. Later light manufacturing emerged as economically viable. Generally the labor force for manufacturing came from the surplus labor force in agriculture, often this was young women from the countryside who moved to the cities to work in the factories. Economically this was a transfer of labor from agriculture where labor productivity was to low to higher productivity occupations in manufacturing.
The products that could be successfully produced by the emerging manufacturing sector in Asian countries was often not technologically sophisticated or prestigous. For example, one of the early successful export products of South Korea was wigs made from human hair. But the successes in the low tech products led to successes in more tehnically sophisticated products. One thing that emerged out of the experiences of Japan, South Korea, Taiwan, Hong Kong and Singapore is that it is difficult to develop successful export industries without also importing products.
In contrast, India virtually shut off imports with high tariffs, low quotas and outright banning. The structure of India's wall against trade is shown below:
Type
Regulation
License?
Consumer GoodsInessential
Banned

Consumer GoodsEssential (Medicines)
Permitted

Capital GoodsRestricted
Permitted
Certification of Being EssentialIndigenous Angle ClearanceLicense
Capital GoodsOpen General License
Permitted
No License Required
Intermediate GoodsBanned


Intermediate GoodsRestricted

License Required
Intermediate GoodsLimited Permissible

License Required
Intermediate GoodsOpen General License

No License Required
In addition to rules concerning the imported goods there are rules based upon the nature of the importer. Imports are to be brought in only by the actual user where is subject to bureaucratic definition. The Economist cites the case in which vehicle tires cannot be imported by bus or trucking companies because only vehicle manufacturers are deemed actual users. Some products whose importation is scheduled for reduction can only be imported by certain government agencies called canalizing agencies. In 1988 40 percent of India's imports were of this canalized variety. Another 12 percent were in the category of restricted, 32 percent were limited permissible and only 16 percent fell into the category of Open General License.
Completely separate from the matter of the regulations on imports is the matter of tariffs. That is to say, even if the importation of a product is approved the tariff might be prohibitive. India in 1985 had the highest level of tariffs in the world, as is shown in the following table.
Nominal Tariff Rates of Various CountriesAs Percentage of Value, 1985
Country
IntermediateGoods
CapitalGoods
ConsumerGoods
ManufacturingGoods

Hungary
14.2
15.0
22.6
20.9

Yugoslavia
18.0
20.7
20.0
19.0

Argentina
21.2
25.0
21.9
22.9

Morocco
21.6
18.1
43.0
27.3

Philippines
21.8
24.5
39.0
28.0

Mexico
25.5
23.5
32.2
24.7

Thailand
27.8
24.8
8.5
33.6

Turkey
29.4
54.9
55.3
37.1

Pakistan
75.0
73.8
127.3
89.8

China
78.9
62.5
130.7
91.2

Bangladesh
97.9
80.5
116.1
100.8

India
146.4
107.3
140.9
137.7

Source: World Bank, cited in The Economist May 4, 1991, Survey page 9
The end result is that India in 1988 had the lowest ratio of imports to GDP of any country in the Asia and consequently also had a comparably low ratio of exports to GDP. It is not impossible to expand exports without having a corresponding expansion in imports but it is as a practical matter difficult to do so. India's government, however, decided in the late 1980's to try to promote exports without loosening its restrictions on imports. The system is a typical Indian bureaucratic monstrosity. Exporters in India are given Import Replenishment Licenses which can be used to buy imports. Profits on exports were made exempt from the corporate profit tax. Because the loopholes created for export industries could be used to avoid the taxes and restrictions on other parts of the economy there are numerous rules and regulation to prevent the specieal rules for exporters from being abused.
The Effect of Protection on Enterprises and Industries
There are some very interesting comparisons to be made between the protected industries and the ones that are not protected. The following table compiles the comparisons.
Comparison of High Protection and Low ProtectionManufacturing Industries in India, 1986

High Protection
Low Protection


Number of Sectors
21
30


Share of Labor Employed
18.5%
77.7%


Share of Value Added
39.0%
54.9%


Share of Capital Employed
53.2
43.1


Capital per Worker
92,500 rupees
17,800 rupees


Average Wage
15830 rupees
9360 rupees


Energy Consumption
1.93 MWHr
1.13 MWHr


The notable differences between the high protection and low protection industries is that the average wage rate is almost 70 percent (69%) higher under high protection. One consequence of the higher wage rates is greater capital intensity in the high protection industries and that did occur. The capital/labor ratio in the high protection industries is 5.2 times that in the low protection industries. As a result the high tech industries, which produce 39 percent of the value-added only employ 18.5 percent of the labor force. The protection system promoted the substitution capital for labor in a country which has an abundant surplus of labor.
Public-Sector Enterprises
In addition to over-regulating the private sector the Government of India has created socialist enterprises directly. The Government nationalized heavy industry (the commanding heights of the economy) and built new state-owned enterprises, SOE's. The evidence that SOE's were inefficient was abundantly clear before the bureaucracy created their new ones. These SOE's are generally more costly to build than privately built plants. In the case of steel plants the SOE's cost 30 to 40 percent more. The excess capital cost should be met out of the return on the capital for the plant but that is not likely to occur since, according to a study by the Bureau of Industrial Costs and Prices, the average rate of return on capital in SOE's is just 1.5 percent. The management problems that afflict most SOE's are:
· excessive over-staffing
· under utilization of capacity
· excessive inventories
· poor management of materials
· obsolete technology
· inadequate maintenance
· wrong selection of products
Sometimes the management problems of SOE's are the fault of the operating managers but often supervising authorities impose unreasonable policies on the SOE's. For example, the Government authorities require electrical generating plants supply power to farmers at a price of zero and to households at a price insufficient for the coverage of costs. The operating deficit for the electrical utilities has to covered by a government subsidy, which is funded by a tax on economically viable enterprises.
India which has woefully inadequate production for its population set up a system in which any action to expand production, beit opening a new plant, moving existing operations to a new location or even expanding production in an old plant, required a license. In the early 1980's the License Raj rejected 50 to 60 percent of the application, most commonly on the basis that there was adequate existing capacity. What this really means is the existing producers did not want to face additional competition and give up their monopolistic control of their markets. The existing producers also discovered the strategy of applying for such licenses to thwart potential competitors from getting licenses. So of the 40 to 50 percent of the license applications that were approved some portion represented spurious application so, in effect, the rejection rate of legitimate applications was higher than 50 to 60 percent. There was a tendency for the License Raj to restrict successful firms from growing. Perhaps this is out of fear that small firms will grow to be large firms. There is a definite ideological opposition to large firms within the Indian planning establishment.
Large firms in certain industries, called core industries, have to abide by the Monopolies and Restrictive Trade Practices Act, (MRTP). Despite the name the effect of the MRTP tends to restrict competition and protect the monopoly of the firms which are already in an industry. The worst monopolies are state monopolies and the MRTP does not apply to them and nothing restricts their practices.
The Government of India has a policy of reserving certain products for "small" companies. In the late 1970's there were 800 products reserved for such companies. A small company was defined as one having plant and equipment of value less than a specified figure. Although such companies were small compared to the giants of industries the amount of wealth involved in the ownership of such companies was large compared to the average wealth of the general population of India. The Lincense Raj provided protection for a class of quite well-to-do Indians, a class ideally suited to dealing with and sharing rents with the members of the License Raj.
The Economist characterized the overall system as follows:
In combination with the industrial-licensing regime [the small company policy] has given India the worst of both worlds: too many small and inefficient companies at the bottom, too many large and monopolistic ones at the top.
The Government of India also has a policy of encouraging firms to locate in economically backward areas. These areas with high unemployed and underemployed labor are not lower cost sites for businesses because the union rules on wages prohibit these areas from competing with the prosperous areas on the basis of labor costs. Thus in these backward areas the wage costs are the same and the transportation costs are higher.
On top of all the other detrimental eeconmic policies India has price controls for many goods. Generally the control prices are set by a formula of cost plus a markup. The cost plus formulation means that firms in the affected industries not only have no incentive to keep costs down they have an incentive to increase costs.
Firms cannot in the matter of labor costs reduce their costs by laying off workers. To do so requires government permission and financial hardship of the firm is not a proper justification. As would be expected, India with this multitude of wrong-headed economic policies has a problem of failed firms. When a firm becomes bankrupt it cannot without permission legally go out of business. The Government tries to keep such failed firms running, sometimes giving subsidies and requiring the state bank to grant loans. The owners of such failed firms may illegally take those assets of the firm which are movable and disappear. But even the disappearance of a company owner may not result in the shutdown of the firm. The Government tries to keep such zombie firms operating under the management of the employees.
Since the net effect of Indian Government policies are negative and upwards of two thirds of the economy is in agriculture the policies are a terrible tax on the poor. Rather than abandon the policies the government and bureaucracy added another layer of policies to try to ameliorate the impact of the other policies. The Government created irrigation projects and fertilizer subsidies for agriculture. In addition there is a roadbuilding program for the rural areas. The bureaucracy also created a system of transfer payments for the rural poor which in its typically obfuscating fashinon called rural development.
In the support of the Indian Government for education the class interest of the government and bureaucracy can be clearly seen. The level of education which is most generously supported is higher education rather than elementary education. But it is generally the children of the well-to-do who attend colleges and universities. Thus the support of higher education is, in effect, a subsidy for the well-to-do families. It is a transfer of income from the poor to the middle and upper classes, the classes which dominate the governement and bureaucracy.
Economic Reforms of Rajiv Gandhi
Rajiv Gandhi was the oldest son of Indira Gandhi, but he did not enter politics until after his younger brother Sanjay was killed in an airplane accident. Sanjay had entered politics as an advisor to his mother, Indira Gandhi. After his mother's assassination in 1984 Rajiv inherited the political mantle of his grandfather Jawarharlal Nehru and the leadership of the Congress Party.
Rajiv came into power as the Prime Minister of India in 1984. He was somewhat of an outsider, his first interests had been in engineering and aeronautics. He was not impressed with the excuses of the bureaucratic establishment. He said,
A poor country cannot afford to carry on billing the poorest people for its inefficiency and call itself socialist.
Rajiv called for a tax reform which cut the income and corporate tax rates. As a result of the lower tax rates tax evasion was reduced and the lower tax rates brought in 40 percent more revenue.
He reduced the restrictions on the economy. He modified definitions so that the limitation imposed by "small company" policy were lessened. Some industries were removed from coverage by the MRTP Act. He created broadbanding in the matter of licensing. Broadbanding meant that a license for version of a product would serve to allow production of a closely related version of the same product rather than requiring a new license for the new version.
Rajiv Gandhi's reforms were considered outside of India as mild and timid adjustments but to the License Raj they were a threat to their hegemony and considered audaciously radical. Mild and timid though they were they brought results. India began to experience some semblance of a surge in production. Unfortunately Rajiv Gandhi was assassinated in 1991 by a suicide bomber representing Tamil extremism.
Infrastructure Policy of India
The rural areas of India need many things but what they get is ill designed programs that they themselves have to finance.
The biggest program is irrigation. The program is beneficial but the management of the irrigation programs is rife with corruption. Successful candidates for administrative positions in the irrigation programs spend many times the amount of the salaries they receive to get these positions. This make sense only because of the opportunities to obtain bribes. Yet the irrigation systems often operate at a loss because the charges are too low. The picture that emerges is inefficient, subsidized operations in which users can be assured of getting the product only if they bribe the administrators.
Many areas need more roads or better roads. Under self-sufficiency communication and transportation to other regions is not essential. But self-sufficiency usually means a primitive, Dark Ages life. Economic improvement requires trade and specialization and this means roads.
The Government maintains a fertilizer subsidy for the rural areas but this is again another program where the result is far different from the purpose. The purpose was to aid the poor but the allocation of the subsidized fertilizer is subject to the discretion of administrators. This presents opportunities to divert the fertilizer into unintended uses, such as to the farms of more well-to-do.
A similar program is the one to sell food to the rural poor at subsidized prices. Again this can lead to theft or diversion and hence the benefit accrues to people other than the poor.
The Economist notes that the spending of India for education is disdirected. More emphasis is placed on secondary and higher educaion than on primary (elementary) education. Thus India is subsidizing the wealthier families who are more able to finance their own educational need. This seems a case of the bureaucratic class taking care of their own interests.
Economic Reform in India As Of 1995
Regional Economies of India
Although the states of central India; Madhya Pradesh, Rajasthan, and Maharashtra; have the largest land area it is the states of eastern India, Uttar Pradesh and Bihar, that have the largest populations. It is also these eastern states that have the lowest literacy rates, the highest birth rates and the highest death rates. Five states that were poor in 1961; Manipur, Bihar, Orissa, Tripura and Uttar Pradesh; remained poor in 1991. Madhya Pradesh, poor in 1961, moved up significantly in relative income by 1991. Dehli is the richest state, having a percapita income more than double the average of the rest. Five above-average-income states in 1961; Maharashtra, Punjab, Gujarat, Tamil Nadu and Haryana; remained above average in 1991. West Bengal, above average in 1961, fell below the average. Some of the above-average-income states are industrial; i.e., Delhi, Gujarat, Maharashtra and Tamil Nadu; but two, Haryana and Punjab, are primarily agricultural.
There is a weak indication that the poorer states are growing faster than the richer states and thus there will be a convergence of incomes levels. The evidence is not overwhelming that this is true, but if so the rate of convergence is quite slow. The estimate is that it takes about a half century for a state to make up half the difference between its income and the national average. This convergence, if it occurs, comes from such mechanisms as the diffusion of capital from states where there is a lower marginal productivity of capital to ones where it is higher. Some convergence may come from net capital transfers by the central government from the richer states to the poorer. Convergence could also come from migration, but this may not occur if it is the more prosperous in the poorer states who move to the richer states. Generally; the states to the east in India and the city of Calcutta are poorer. The states to the west and the city of Bombay are wealthier. Bombay is the industrial and commercial power house of India. Delhi is a special case. Its economic prosperity stems from being the seat of national government and its bureaucracy. Businesses locate near Delhi because there is a definite advantage being close to the agencies that set regulation, issue licenses and disperse government contracts.
Madras is an important economy in the south and Bangalore, once primarily a resort, has become the center of India's high tech, computer-oriented information technology industry.
Reference: Paul Cashin and Ratna Sahay, "Regional Economic Growth and Convergence in India," Finance and Development, March, 1996, pp. 49 -52.