World Community Must Reoncile the "Irreconcilables" on Iran

The Charlie Rose Interview




Mr. Prime Minister, thank you very much for letting us visit you here at the official residence.

PM: It was a great pleasure and great privilege to have you interviewing me at my residence.

CHARLIE ROSE: Thank you very much. Anybody who comes here from America always comes back and says it's really a remarkable experience. The last time I was interviewing you, you quoted Victor Hugo saying, as you had said to the Parliament, "Nothing can stop an idea whose time has come."

PM: Whose time has come.

CHARLIE ROSE:In terms of the United States and India, you think that applies today? An idea whose time has come?

PM: I sincerely believe that. And that's what I-- said in my address to the US Congress. I said there are partnerships based on principle. There are partnerships based on pragmatism. And fortunately, when it comes to Indo-American's relations, both kind of situations point to a new robust phase of relationship, a multi-faceted relationship, which I believe is just in the interest of both our countries.

CHARLIE ROSE:Can it be transformational?

PM: It could be transformational, which I hope it will be transformational.

CHARLIE ROSE: Said signaling a new what?

PM: A new India which realizes its destiny in the framework of an open society, in the framework of an open economy, respecting all fundamental human freedoms-- great respect for pluralistic, inclusive value system. I think that's what unites India and the United-- India and the United States. And I do hope that working together, our two countries can write a new chapter in the history of our relationship.

India has, of course, aspirations of getting out of its poverty, ignorance, and disease which still afflict millions of people. But I do believe that we have something to offer to the rest of the world, including the United States. Nowhere else you will find a country of India's diversity, of India's complexity, one billion people trying to seek their social and economic salvation in the framework of democracy, in the framework of an open economy. I sincerely believe what happens in India has I think lessons, morals for a future evolution of humankind in the 21st century.

CHARLIE ROSE: What are those lessons?

PM: I do believe that the future of civilization belongs to those who emphasize on working together instead of talking about clash of civilizations. What we need is a dialogue among civilizations. And we need multiculturalism, respect for diversity, tolerance, respect for diverse-- faiths. And that's what we are doing in our country. And if we succeed, and if we succeed in doing all this in the framework of a democratic policy, I believe large part of humanity will draw appropriate lessons from what is the wave of the future in the 21st century.

CHARLIE ROSE: And you're prepared-- in this new strategic partnership with the United States to use that-- to help in terms of bridging and creating dialogue with the rest of the world where it might be necessary to have that kind of background involved.

PM:We have-- yes. What we are trying to do I believe, has lessons for what happens to the rest of the developing world. But not only developing world. With the revolution in information technology, with the revolution in transport technologies, I think geography has lost its old significance.

I believe whether it is the United States or Europe, they will all end up as multicultural societies. So India's great experiment of a billion people of such great diverse persuasion, working together, seeking their salvation in the framework of a democracy, I believe will have some lessons for all the multicultural societies. And I believe all societies, all thriving societies of the future are going to be multiculturals.

CHARLIE ROSE: So on Wednesday, March 1st, the President of the United States, representing the world's oldest democracy, comes to see you representing the world's largest democracy. How did that happen? Because it is said that the president saw you at the United Nations, one story, and pulled you aside or asked for a moment and said, "I understand your country's demand for oil. I understand China's demand for oil. I understand our demand for oil. I wanna help you-- with the nuclear issue. And let us work on that. And let us try to get past what has been an obstacle."

PM: Well, I don't recall his telling me at the United Nations. But I do recall his telling me at the very first meeting that I had with him. And we were together also at Glen Eagles-- at the G8 Summit. We had extensive-- dialogue. We were sitting side by side. And this is exactly how he described the-- the global energy scene, India's requirements.

And he said to me, "If the oil prices go up to $100, that hurts India, but it also hurts the United States. So we must work together to help India to get its-- nuclear security by increased emphasis on the availability of nuclear power."

CHARLIE ROSE: So that puts this nuclear deal at the centerpiece of this new relationship.

PM:In a way, yes. But ours is a multidimensional relationship. But at the present state, energy has emerged as a major constraint on our development. At the present, 70 percent of India's imports of oil and oil products are imported from abroad. There is uncertainty about supply. There is uncertainty about prices. And that hurts India's development.

We have large reserves of coals. But extensive use of coal, unless they use clean coal technologies, I think has environmental hazards global-- or global warming and all that. But in all this, if we have access to nuclear energy, that adds to our maneuverability in ensuring energy security as our country marches on, on the path to accelerated development.

CHARLIE ROSE: It'll also mark, too, a new access to technology and to fuel, you know, and future reactors in the civilian sphere. It also seems to give acceptance within the global community to the responsible -- your sense of responsibility in handling-- new-- nuclear weaponry.

PM: Well-- we have an impeccable record. We have never been the source of unauthorized proliferation of these sensitive technologies, even when the provocations were there. We have a very tight system of export control.

In fact, before going to the United States, I got parliament to pass a latest legislation which puts our export controls-- on the same footing as most of the developed countries-- when it comes to export of sensitive technologies. So I do believe we-- we are a nuclear weapons state. But we are a unique in the sense that we still believe that the salvation of the world ultimately lies in moving towards universal nuclear disarmament.

But that's a long distance away. And we Indians would like to be a part of the nuclear world order-- accepting all the responsibilities that go with being a responsible nuclear power, but at the same time, enlarging-- our options with regard to energy security of our country.

CHARLIE ROSE: The president arrives on Wednesday. Will you have an agreement before he arrives, do you think?

PM: Well, I sincerely hope -- that's my hope. That's my prayer.

CHARLIE ROSE: Right now there seems to be a separation in terms of what reactors will be in the civilian field and what will be considered military and this separation. Is that the dividing issue? What goes where?

PM: Well, I wouldn't call it a dividing issue. It is an important issue. I think the United States-- I recognize that the United States has to sell this deal to the Congress. But we have also our parliament, as I mentioned to the president, this deal is not about India's strategic program. That is not under discussion.

What is discussion is our civilian nuclear program. And there are concerns. And we had agreed that we will have a credible separation between our strategy program and the civilian program. That we are committed to-- whatever we have committed in July 18's statement in letter and spirit, we will fulfill our obligations.

CHARLIE ROSE: It's more than 90 percent likely that we'll have an agreement.

PM: I certainly hope that.

CHARLIE ROSE: You think it'll happen before the president arrives or once the president arrives?

PM: Well, there's only a few days (LAUGHTER) our officials have with that work. They will work-- yesterday morning Mr. Burns has gone back. I sincerely hope that we can clinch this issue. And that would be a great contribution of President Bush to ending India's isolation from the world nuclear orders.

I mentioned to the president last time I met, "Mr. President, the people of India, particularly the thinking part of our population, our scientists, our technologists, have rightly or wrongly nursed this grievance against the United States. That the United States has joined with other countries to erect a system of controls which denies our country access to dual-use technologies to prevent us from leapfrogging in the race for social and economic development." And I said, "I appeal to you to look at India-US nuclear cooperation in that grand setting." I look upon it as an act of historic reconciliation.

CHARLIE ROSE:The President has Congress to deal with.

PM: Well, we have also a parliament. And our Parliament is also very sensitive about these issues. I have promised our Parliament that I will do nothing which will hurt India's strategic program. And our program is a modest program.

Also, although we are not a signatory to the NPT, we abide by most of the guidelines that-- operate with regard to export of sensitive technologies. And, therefore, I do believe that India is a unique case. And you need I think exceptional skills I think to incorporate Indian into the world nuclear order.

CHARLIE ROSE: Some say the United States, if you-- go ahead with this as you plan to do, the United States, it's hypocritical because of your objection to Iran having a nuclear weapon.

PM: No. Our relations with Iran, we cherish a great deal. We have civilizational links. We are in the same region as Iran. And our concern with regard to Iran is that Iran is a signatory to the NPT. Iran must, therefore, have all the rights-- which go with its being a member of the NPT.

But it-- it has also certain obligations, which it has voluntarily taken. And, therefore, it is appropriate that Iran also fulfills those obligations. Now there have been doubts about an arms program. The International-- Atomic Energy Agency has gone into this. The Iranians themselves have admitted that certain-- elements of their program they had not reported to the International Atomic Energy-- Agency.

Our hope is that it is not too late in the day to resolve these differences-- through dialogue, through diplomacy. And I hope that the world community will have the sagacity to give diplomacy, dialogue the full scope to reconcile these so-called irreconcilables.

CHARLIE ROSE: Why do you think the president-- or do you believe he views this relationship with you and your country, between the United States and India, as a major foreign policy initiative. Some have even said, as you know, that for this president it's equivalent to President Nixon going to China.

PM: Well-- well-- well, I have met the president now three or four times. And I have been deeply impressed by his commitment to the cause of democracy. He sincerely believes that democracy is good for everybody, that democracy-- is good for world peace, democracies don't go to war. And the fact that India is a functioning democracy despite its extreme poverty, India has stayed the course. It has remained a full-functioning democracy. I suspect that weighs with the president a great.

CHARLIE ROSE: The idea of democracy and being able to have a strategic relationship with the world's largest democracy is important to him.

PM: That's what I feel. He's always told me, and in his address to the Asia Society a few days ago.

CHARLIE ROSE: Few-- days ago, yes.

PM: He laid, again, I think great emphasis on that-- the solid relationship-- well, is based on values as well as interest, as the president put it. The values are the values of democracy, the values of pluralism-- the value of tolerance of differences. And interests are that of the two countries, if they work together, this is a win-win game.

India's growth rate will be accelerated. But in the process, medical would also benefit. Outsourcing information technology revolution, the access to India's-- human resources, India's pool of scientists. It will also help American companies to become leaner, meaner, more efficient. And they become more competitive both in the United States and in dealing with the rest of the world.


I wanna talk about all those economic issues. Let me stay with the strategic issue for a second. There are those who say the president would like to have a counterbalance to-- to China. That India serves-- because of all these interests, economic as well as-- cultural and as well as the-- sharing democracy, as the best way for the United States to have a counter-availing relationship-- for China.

PM: Well we are not in competition with China. I had a very good discussion with the president-- on this subject. And I think there was a complete unanimity of views. Both of our countries believe China is very important. The future growth of China-- China's influence is bound to rise.

And we all believe that we must remain engaged with China. We have differences with China with regard to the border issue. We are making a sincere effort to resolve-- resolve those differences. And the president told me that's precisely what we should do I think. He says the United States also wants to remain engaged with China.

But I also believe that without looking-- at each other as rivals or as competitors, in a democratic India operating in the framework of an open economy, an open society, has I think some significance for developed-- developing countries not only in Asia but outside Asia.

CHARLIE ROSE: President said he didn't want to-- I think his words were, "I don't want to-- contain China." But he doesn't think that one country should dominate in the region. Do you share that idea?

PM:Looking at history, I think that would be an appropriate model.

CHARLIE ROSE:Does-- does India-- want to help contain China if that's America's policy?

PM: As I said, we are not in-- competition with China. We are not part-- are not going to be a part of any alliance against China. And I do believe that the present Chinese leadership wants to make a success of its modernization.

I don't believe the present leadership of China threatens India or, for that matter, other countries. We would like to have warm, friendly relations with China. We would like to resolve our border dispute. Our economic-- relations are growing. And both of our countries need peace and cooperation to make a success of our ambitious-- plans to get rid of our-- get rid of poverty that afflicts millions of people in both countries.

CHARLIE ROSE:What do you think China's ambitions are?

PM:Well, as of now, certainly I think modernization of Chinese economy and Chinese society-- is a prime concern. But also I think the Chinese do have visions of being a great power. And I think it's legitimate. And I don't see that that's a danger to us.

CHARLIE ROSE:India wants to be a great power.

PM:Yes. As I said, -- when you quoted-- me when I quoted Victor Hugo in '91, I said precisely, I said the emergence of India as a major-- global power is an idea whose time has come. This is a legitimate ambition for China.

This is a legitimate ambition for India. And the challenge for the humanity is to-- to evolve a world system-- in which the legitimate ambitions of both our countries can find constructive expression without threatening anybody else.

CHARLIE ROSE:Secretary Rice said-- Secretary Rice has said, you know, that what the United States goal is, is to assist in any way it can India becoming a global power in the 21st century.

PM: That's what she came here and said last year. And she for the first time-- made that formulation. And I rang her up a few days ago (LAUGHTER) and I said to her-- "Madam, you were the one who planted this idea that the United States would like to help India to become a major power. Well, this nuclear deal is one manifestation of a concrete expression of US interest. So I hope we will have your blessings to conclude this deal before the president comes."

CHARLIE ROSE:As India becomes a global power with its economy, with its population, with its democracy-- with its trade-- how can the United States, in a strategic sense, help India?

PM:Well-- there are diverse ways-- in which right now terror and all that goes with it is a prime concern. It's a concern of the United States. It's the concern of India. Joint strategies, cooperation, joint sharing of intelligence in controlling terrorism, in making the world free from terror. I think that's the fundamental consideration if our development aspirations are to be fulfilled. And I think our two countries can cooperate in.

CHARLIE ROSE:In the battle against terrorism.

PM:Yes. Well-- in our neighborhood, we have the nascent democracy of Afghanistan. We have been engaged in helping Afghanistan to the best of our ability. We have a development assistance program for Afghanistan of nearly $650 million. Our program covers all the-- basic-- human needs-- the-- and requirements of Afghanistan.

So working together in helping nascent democracies in the task of reconstruction, in the task of development is another area where our two countries can work together. And the president himself mentioned our cooperation in making the world-- secure-- with-- against-- epidemics like HIV/AIDS, malaria-- of tuberculosis.

These are our major problems. The United States and India can work together. We can pool our research capabilities-- to find vaccines which will provide effective answers to the problems posed by these epidemics.

CHARLIE ROSE:It's already happening in the private sector with Bill Gates coming here and-- and being involved.

PM:Yes-- Bill Gates is very intimately involved in these programs, and we welcome his involvement. And I mentioned about energy securities.

CHARLIE ROSE:When you think about agriculture-- there is this idea that's being promoted, which is a second green revolution.

PM:Yes. I did mention myself in my address to the joint session of the Congress. The first green revolution in our country, which came in the early-'60s, was boosted by the cooperation between Indian authorities, Indian scientists, and the United States, the Rockefeller Foundation, the Ford Foundation. I think that's a growing chapter in the history of cooperation between our two countries.

CHARLIE ROSE:And it can be reignited.

PM:It can be reignited. And that's what the President and I have some very good ideas. We have discussed that, how-- the knowledge initiatives to give a big boost to the second green revolution in our country.

CHARLIE ROSE:There is also military cooperation. Some representatives of your military went to see Secretary Rumsfeld. There is an agreement there.

PM:Yes. There is a framework agreement.

CHARLIE ROSE:What are the implications of that?

PM:Well, we would like to diversify sources of our purchases of weapons. Also, we would like to have a cooperative arrangements where some of these things, joint research, joint-- joint production. And also I think the-- the cooperation between the military of two-- two-- countries, we have already in place arrangements where the air forces-- of the two countries have joint exercises. So I would like I think to expand-- the relationship with the United States in all these diverse fields.

CHARLIE ROSE:Is in any way it difficult to be a friend of the United States in 2006?

PM:Well, let me say that-- events in Iraq, events in Iran do-- create some anxieties, particularly among the Muslim-- population of our country. And I sincerely hope that the difficulties that are there in Iraq and Iran can be resolved, that Iraq will see a new era of hope in which its people will enjoy a full sovereignty.

And also the problems that there is with Iran-- can be resolved through dialogue-- through giving diplomacy a chance. Otherwise, I don't see I think there are any problems between India and the elected states.

CHARLIE ROSE:No significant foreign policy differences other than--

PM:No-- no--

CHARLIE ROSE:--Iraq, and you're prepared to help there in terms of--

PM: Well, in terms of reconstruction, we have offered, for example, to train their police, to train their civil service, train their election officials. And just as what we are doing in Afghanistan.

CHARLIE ROSE:The UN membership-- permanent membership on the UN Security Council. France was here, said, "We're in favor of you."

PM:I would very much like the United States I think to-- (LAUGHTER) when the President comes here--

CHARLIE ROSE:You'll remind him.

PM: --I think that he would announce that the United States is also of the same view. But I recognize the United States as a superpower. It has various interests. It's balanced various things. But I do believe that India's case for permanent membership of the Security Council is very strong.

CHARLIE ROSE: But you'll remind the president when he comes.

PM: Well-- this matter was raised with-- with Secretary Rice when she came here. And if I get a chance, I will raise that again with the--

CHARLIE ROSE: So if this nuclear agreement can't be reached, your national security advisor says that the relationship will go into the stratosphere, is the way he described it. I just wanna make sure I understand your vision of the stratosphere in terms of how the United States and India can cooperate. Certainly in terms of-- using-- India and the Middle East as you suggestion, as a sense of a voice for where there is a secular-- society of diverse religious and ethnic backgrounds. How else would this be manifest? This strategic relationship that's possible with the United States?

Well, in areas of cooperation, joint working , joint thinking, and that-- cooperation for us is regional and bilateral, I think there are-- enormous-- enormous possibilities. And today there are no barriers to-- increased cooperation between India and the United States in any field.

But as I said, what goes on in Iraq, what goes on in Iran, it does affect a significant proportion of our population.

CHARLIE ROSE:Do they believe it's somehow moving away from-- India's position of a non-aligned nation or have you long ago moved away from that idea?

PM: I have always regarded non alignment as-- a statement that India's policies-- foreign policy, will be guided by what I describe as enlightened national interest. That means we will make judgments-- on an independent basis with the sole concern being what is enlightened India's national interest. In that sense, non alignment remains as relevant today as it was in the 1950s.

CHARLIE ROSE:Who opposes-- in your political community-- this coming of the United States and India closer together.

PM:Well, my opinion is that it has wide support, in fact the major of our population-- wants-- closer-- involvement between India and the United States. There was a research team which conducted a survey about what Indians think of Americans. And 71 percent I believe said, "Well, I think all the nice things about our working together with the United St"—There are people I think that there are old mindsets-- who-- still-- remain at heart in the Cold War ideology.

There are the left parties of our coalition, they-- still regard the United States as a hegemonic power. But-- I think the-- the new Indians of tomorrow, our young people, our businessmen, our scientists, our technologists, I think they are not held back by the cold war thinking.

CHARLIE ROSE:I've been visiting this week in India. And they all tell me that with respect to China, there's an increasing economic relationship in respect to China. And that that is good, that China sees India as a market, that China has a manufacturing base, India has a service base. They have all kinds of trade developing between India and China.

PM:I agree with that, I agree with that.

CHARLIE ROSE: And where does that go, and what's the benefit of that?

PM: Well, I think our two countries-- if our trade grows, I hope that out of that will come a new attitude of coexistence. We had this unfortunate-- incidents of 1962

CHARLIE ROSE: The border.

PM:Of the border. If we resolve that, the cooperation between India and China would ( UNINTEL) We are both countries located in Asia, and the Chinese economy grows at the rate of nine percent, the Indian economy growing at the rate of eight percent. Enormous, I think, opportunities for two way flow of trade, technology, an investment.

CHARLIE ROSE: Is the-- the United States relationship with Pakistan-- an issue for you?

PM: No. We want Pakistan to prosper. Pakistan should be a moderate Islamic state. It should be a prosperous country. It is in India's interest, it is in the world's interest. I sincerely hope that whatever influence that the United States has in Pakistan, it will convince Pakistan that-- using terrorism as an instrument of state policy has no place in the world that we want to build.

If Pakistan-- honors its commitment given in 2004 that the Pakistan territory will not be used-- for-- promoting terrorist acts against—India, the sky is the limit of cooperation between our two countries. This basically-- we are-- the same people. There are ties of religion, there are ties of language, there are ties of culture.

CHARLIE ROSE:You were in fact born in Pakistan.

PM:Yes. President Musharraf was born here, I was born on the other side of the border. And-- my vision is-- to wait for the relationship between India and Pakistan, it will be like the relations between Canada and the United States.

We want Pakistan to-- flourish as a modern Islamic state. That is in India's interest, that is in the interests of the world as a whole.

CHARLIE ROSE:You mentioned your economy, you mentioned China's economy. You've been growing at a rate of seven percent. You are the former finance minister and people give you a lot of credit for what has taken place. They also raise this question. Is it sustainable?

PM:Well, I think the-- proof of the pudding is in the eating.

CHARLIE ROSE:You're using an American expression.

PM:So the last 16-- 15 years now-- when we opened up the economy, I think the economy has sustained a growth rate of six percent. The last-- four-- three, four years of our economy now is increasing at the rate of seven-- percentage. And I do believe that-- our growth rate in years to come will go up.

We have now a record savings rate of 29 percent of our GDP, it has gone up by five to six percent in the last five, six year. We have a record investment rate of 31 percent of our GDP. In years to come, savings rate will go up. Because we have-- a-- a very young-- working population profile. In years to come, if we can find jobs for all of them, I think they would need to-- they would-- be a source of increased income, they would be a source of increased savings. I see India inching in the next five or six years, to a growth rate of close to ten percent.

CHARLIE ROSE:In the next two or three years.

PM:Next-- ten years. not two years.

CHARLIE ROSE: What has to take place in terms of liberalization-- and-- privatization for that to occur?

PM:Well, I think-- liberalization, by and large, we are there. Our principle concern right now is the infrastructure. India's infrastructure has to be modernized, has to be expanded at the rate which will be consistent with the growth requirements. We need to modernize our road system, post system, airport system. We need-- to move towards ensuring our energy security.

And then we will have to-- relook at the way our government systems function. I think our government has gone out of business. Many-- many things we've got out of. But still I think, there is an old--(UNINTEL) hand. The government considers itself as-- what we call, as the Mai Baap , the father and mother.


PM: I would like government to have greater concern as a facilitator rather than as a regulator. There, I think, we have some distance to go. We have also problems in modernizing our political system. There are several states in our union where-- I think-- the politicians are not preoccupied with the great dynamics as I believe they should be. They're still mired in the old-- the-- religious controversies, the past controversies. So India's political system also would need to be modernized.

CHARLIE ROSE: Do you have the political will to make sure that happens?

PM: Well, I think it is happening. There, I think-- it-- could have happened at a much faster pace. But I sincerely believe that this-- is-- now an inescapable-- inevitable part. Things are moving in that direction.

CHARLIE ROSE: For example, I mean I've had conversations with business leaders about-- you know-- the retail segment. And some have said that's gonna be a kind of ticking point. I mean if there's modernization in the retail area that would be clear evidence.

PM:Well, we have taken the first steps. We-- this year we have opened up to trade with regard to majority ownership of foreign-- companies. Single brand area have been opened up. There are-- in all these matters, there are concerns. There's such a thing as the fear of the unknown. And-- in a country where-- employment opportunities are not growing fast enough, the fear of change tends to be very acute.

I have to create in our country, a macroeconomic environment where the employment in aggregate can go up-- at-- a handsome rate. Once that happens, if people lose their job in one sector it will not mean that they become perpetually unemployed. From one sector, they could move on to other sectors.

I have, therefore, to wait until that time when the employment situation in our country is such that jobs are increasing. In such numbers-- that we can take risks with regard to retail. I don't think we could do it overnight. But I do recognize that all sectors should be open to foreign direct investment .

CHARLIE ROSE:There's a dramatic difference between foreign investment into China and into India. And-- and people say that they're deducing the-- regulations will dramatically change that.

PM:Well China is not-- or-- I think-- a country-- which-- does not regulate. But there is a difference between the Chinese system and our system. The Chinese are much more as-- I think-- centralized. We have-- three tiers of government. We have the central government, we have the state government, we have the local authorities.

The central government gives approvals for certain investment. But there are certain things that the central government cannot do. If they want to get land, if they want to get water, if they want to get electricity they have to go to the state government. If certain facilities, local facilities have to be-- , the local authorities have to come. And that makes the Indian system slow moving-- Indian administrative system slow moving.

I do believe that we have a problem here and we must find ways and means in which I think businessmen who want to set up enterprises here can get all clearances in one window without too much loss of time running from one person, one sector, to another. One authority to another. That-- I think we have made substantial progress in the last 15 years but we need to pick up .

CHARLIE ROSE: There is no turning back.

PM:There is no turning back.

CHARLIE ROSE:From liberalization--


CHARLIE ROSE:From foreign--


CHARLIE ROSE:From change.

PM:Really, I think I just said-- the proof of the pudding is in the eating. When we launched this reform program in '91, I was opposed by both the extreme left as well as the extreme right. In fact, when I-- in '92 when I lived-- when I rose in Parliament to present the budget of the government of India. All the opposition said they wanted to move a breach of privilege motion because what I'm doing is nothing else but carrying out the dictates of Washington and the IMF.

Now from that day, lots of things have changed. Since then, there have been three changes of government. From 1996 to 98, there was a United Front government. The left party was-- part of that. That government did not change the direction of policies that we set. Then we had a BJP led government from '98-- they-- wrote viciously against liberalization, that we were selling India to foreigners.

But when they came to office, they also did not change. In fact, they-- they expanded what we had done. So I think we have seen three changes of government-- right, left, center, but direction of economic policies has been toward progressive liberalization. That made no difference of the pace at which India moves. But it should be made loud and clear about the direction in which India is going to move in years to come. The-- it is truly an area of civil shift in our policies.

CHARLIE ROSE:And it has led you to-- you know-- a global position that-- that everybody talks about.

PM:Well-- in '92, even big business was against liberalization. The CII for example, big captains of industry, were against liberalization. They said Indian industry had been thrown to the dogs. That they had become becomes hewers of wood and drawers of water, that the Americans would come and take over our country. We will all-- we will all end up saluting them.

Now-- Indian industry is much more confident. Not only it welcomes competition here, it wants to go and compete abroad, I think. Mr. Mittal has become the world's steel czar.

CHARLIE ROSE:He-- he certainly has. Now what did you want to be-- you said in this respect to Mr. Mittal, I think you said to Chirac, "Be kind to him."

PM:I said, well, this is an issue which should not be-- I think-- allowed to be influenced by too much-- sentiment. But all stakeholders much have an assurance that their interests, respective interests, will be taken care of.

CHARLIE ROSE:Why do you think the French were opposed to this merger?

PM:Well, in our countries, I think there is such a thing of the fear of the unknown, loss of jobs.


PM:I don't-- blame governments if they get worried about these things.

CHARLIE ROSE:Yeah. With-- with-- tell me why you were so wise about this economic picture for India? I mean we did you know that-- that even industry didn't know and that so many politicians didn't know when you took over as finance minister in '91?

PM:Well, I don't-- claim that I had-- any-- extraordinary vision. But I had been associated--

CHARLIE ROSE:But you've been right--

PM:But I have been associated with the management of the Indian economy. Ever since 1971. Even my work as an economist-- when I was in the academic field, was also about economic management of. And-- I've seen—the administration in our country from several angles. I was in the ministry of commerce, I saw it in the ministry of finance. I went to the Reserve Bank of India. I was on the planning commission. And I would like to give credit to Rajiv Gandhi . Because he saw when he became the Prime Minister in 1985 that India has to change. So a lot of work was done. There was a broad consensus among the thinking segment of our population that India has to liberalize. That the old command economy cannot I think-- give India the mileage, the dividends that we need in terms of growth. And so my task in '91 was relatively easy.

CHARLIE ROSE:But when you took over the Indian economy was in terrible shape.

PM:Well, the-- in-- inside I find democracies sometimes a crisis is a blessing. That it concentrates the mind. (LAUGHTER)

CHARLIE ROSE:Like the hang man's noose.


And there is the American saying don't fix it--.


If it ain't broke don't fix it.


If it ain't broke-- so if things are moving alright I think-- you do not get the momentum to get a cohesive consensus built in favor of change. In '91 I said to my colleagues and I said to the leaders of the opposition that if you don't cooperate with me I will have to declare India bankrupt and hand over the economy to the IMF and international--


That got their attention didn't it. (LAUGHS) Based on that your-- let me put-- think about the year 2050. Tell me what will be the-- not in terms of-- of--


CHARLIE ROSE:2050, two thousand-- two thousand fifty, 44 years from now. Tell me what will be the first and the second and the third largest economy in the world.

PM:Well, I-- I really don't know. I-- I can't predict because of human evolution or economic evolution. But I do believe whatever order you have India would figure in the first four or five countries.

CHARLIE ROSE:Most people think three. Goldman Sachs has his famous report--


CHARLIE ROSE:--as you know, that says three by maybe 2025.

PM:Well, I hope they're right. But I-- I-- as I said I-- I'm not very good at making these projections. But I do know the processes that we have unleashed in our country we I think insure that India is there in the first four or five.


And what about, as many people say, how are you gonna take care of the poor? How are you gonna make sure that the agricultural population finds a way to live?

PM:Well, let me say-- I've always believed that the ultimate purpose of economic policies and development policy is to meet the basic needs of our people. And for that we needed fast expanding economy. Meaningful solutions to the problems of mass poverty that prevails in our country I believe can really be found in the framework of an expanding economy. If the economy is not expanding redistribution of income becomes a zero sum gain. And therefore all the class struggle and it becomes much more vicious.

If the economy is growing fast there is scope for redistributing incomes from the rich to the poor to place-- to put in place social safety net. For example we have done that this year. We have said that in rural areas there will be guaranteed employment for 100 days in public works for whosever wants to come make minimum wages. Now this is not a very revolutionary program but it will increase the flow of income in rural areas. It is a program of the type which has probably few other counterparts in the rest of the world.

So our emphasis is if the economy grows enough, fast enough, the tax system should be modernized so that the tax revenues rise fast enough also. And we should put more money in education. We should put more money in health. We should put more money in devising credible social safety nets for the poor.

CHARLIE ROSE:What is it about the Indian people that have enabled with these change in policies to have come to this moment?

PM:Well, I've always believed India is a country blessed by-- of-- blessed by God with enormous entrepreneurial skills. Now these entre-- entrepreneurial spirits were kept suppressed by the command and control system. That started off well with good intentions, maybe it served us well in the beginning. But after time it became a factor on further progress.

I believe if we remove these factors the-- the flowering of the entrepreneurial spirit of India would I think bring about a change in the way our economy works and functions. And that is happening. In '91 where was the IT industry? I think Mr. Narayanamurthyji, Mr. Premji, they were all I think insignificant entities.

CHARLIE ROSE:Now they're giant global concerns.

PM:With one single thing-- I think Narayanamurthy is an example. When I became Finance Minister in '91 I discovered that the wealth tax rates, the taxation of wealth, there was taxation on wealth. It was so atrocious and so high that actually nobody could accumulate money in an honest way. I removed that tax. And the result was that Indian companies for the first time acquired an incentive to grow big, to grow rich. And you see the results of that in Bangalore, you see it happening elsewhere.

So I am convinced the entrepreneurial spirit of the Indian people if allowed to be expressed freely in the market place India will be alright.

CHARLIE ROSE:What is the impact of your demographics? You're very different say from China.

PM:Well, I think our demographics is going to help us grow at a faster pace. Because the Chinese insistence on one child norms I think the proportion of older non working age population is going to rise sharply in China. Our age profile is much younger. The proportion of working population to total population will rise for another decade.

And if we can find jobs for this population that is going to be a source of wealth creation. And they are saying that it will go up. India's investment rate will go up. And I believe that's a plus point.

CHARLIE ROSE:India and the United States seem to have beyond the oldest democracy and the largest democracy this special relationship period. You have a daughter that lives in New York. Your National Security Advisor has a son who lives and works in New York. Your Finance Minister went to Harvard Business School. There has been this tradition, there's a large Indian population in New York. Is that gonna continue? Is that a central part of this relationship?

PM:Well, let me-- so in the evolving global economy the transport revolution, the IT revolution.

CHARLIE ROSE:The death of distance.

PM:The death of distance. There is hardly any middle class family in India who doesn't have a son, a daughter, a son-in-law, a brother, a brother-in-law in the United States. That is a very powerful new bond. And what is more is that-- I should like to express our profound gratitude to the-- Americans of Indian origin. The way they have conducted themselves, the way they have worked hard to carve out a niche for themselves in the Silicone Valley, I think this has also given America a new idea about what India is capable of.

Our challenge is as I often say is to do what the Indian Americans have done in the Silicon Valley without going there. That we (LAUGHTER) can reproduce a system here.

CHARLIE ROSE:When you look at India today it's moment, tell me what you think it's destiny is.

PM:Well, India's destiny is what I described in '91 quoting Victor Hugo. The emergence of India as a major global power is an idea whose time has come. And I would only modify it by what Jawaharlal Nehru said. He said the sudden rise of India means the service of those steaming millions steeped in poverty, ignorance and disease. To see that in my lifetime, we can soften these harsh edges of extreme poverty and unleash a new economic and social revolution which will bring out the latent creativity and entrepreneurial spirit of our people I think that's what I feel..

CHARLIE ROSE:And if that's the destiny of India how do you-- what do you think your legacy is?

PM:Well, I'm a small person put in this big chair. What-- I have to do my duty, whatever task is allotted to me. I-- I think-- well, for me it's enough I think since '91 I have been in part of the process of-- actually in the reform movement. Of course no single person can take credit for that. I mentioned the role-- the role of Rajiv Gandhi. But I think whatever I've done I hope I earn a footnote in India's long history.

CHARLIE ROSE:And you certainly have, and it will be even more likely if the President comes on Wednesday and says we have a nuclear agreement, and I'm fully supportive of India's desire to be-- have a permanent seat on the UN Security Council. That would be a great gift.

PM:Well, it will be a great gift. And I pray for that moment in which I think we can acclaim to the world that we are now in a different new era of Indo American relationship of trust, of working together, partnership. Strengthened both by our commitment to common values and also the identity of interests.

CHARLIE ROSE:Mr. Prime Minister, thank you for taking this time. It's been a pleasure--

PM:Thank you Mr. Rose.

CHARLIE ROSE:--to be in your company. And a pleasure to see you. And I look forward to many, many visits back.

PM:Well, please do. And it has been a great pleasure for me talking to you.

Interview of Prime Minister by Ms. E.G. Weymouth, Editor-at-Large and Senior Diplomatic Correspondent of Newsweek, USA

Interviewer (Ms. Elizabeth Graham Weymouth): So, you are just about ready to go to the United States Prime Minister.

Prime Minister (Dr. Manmohan Singh): Yes, in four days’ time.

Interviewer :What would you like to accomplish in the United States when you see President Obama?

Prime Minister: We are strategic partners. We have good relations. But there is the new Administration in America. We are now in our second five-year term. So, it is appropriate that I should renew our partnership. I sincerely hope that we can work together with President Obama and his Administration to build an enduring partnership based on equality and mutual understanding for promoting greater security and sustained development in the world.

Interviewer : So, that’s your aim when you go to Washington,

Prime Minister: That is, to put it succinctly.

Interviewer : But people say, for instance, that you might announce a partnership in space, that you might announce a new green revolution. Can you share with me and with my readers some of the thoughts you have on how you see the possibility of India and the United States cooperating in the future, Sir?

Prime Minister: First of all, we had a watershed and a landmark agreement with the United States on nuclear cooperation. We would like to operationalise it and ensure that the objectives for the nuclear deal are realised in full merit. My sincere hope is that we can persuade the US Administration to be more liberal when it comes to transfer of dual-use technologies to us. Now that we are strategic partners these restrictions make no sense. India has an impeccable record of not participating in any proliferation of weapons of mass destruction. So, that is my number one concern.

Interviewer : So, you are talking about the consent agreement that the President would have to sign and send to Congress?

Prime Minister: That is right.

Interviewer : And on your side, I believe, your Parliament would have to pass a liability agreement. Is that correct?

Prime Minister: We will do that. Our Cabinet will be taking a decision. I do not see any difficulties in honouring our commitments.

Interviewer : So, you are concerned about the US honouring the consent agreement?

Prime Minister: We have no worries, but we would like a positive reaffirmation of this Administration to carry forward that process.

Interviewer : To carry forward the civil nuclear deal?

Prime Minister: Yes. I also said that this is a partnership for sustained and sustainable development of India and the new global world order which is in search of a new equilibrium. India and the United States could be partners in refocusing our attention on an equitable, balanced, global order.

Interviewer: What does that mean exactly?

Prime Minister: Well, there are several components of sustained development. There is the energy cooperation - we would like to strengthen energy cooperation with the United States - clean coal technologies, renewable energy resources. Similarly there is concern for food security. We would like to have a second green revolution in our country. In the first green revolution technologies which were by-product of the US public sector played a major role in transforming Indian agriculture. We need another green revolution to carry forward that process still further. Therefore, cooperation in the field of agriculture, cooperation in the field of science and technology, cooperation in the field of health, ensuring cooperation between our two countries in dealing with pandemics, these are all the concerns that I have, and I propose to share these concerns with President Obama and hope that we both can reaffirm our commitment to carry forward these processes.

Interviewer: I got an email this morning from Gen. Petraeus who said he never met you but he sent you his regards.

Prime Minister: Please give him my regards.

Interviewer: I guess the obvious question comes up of how you see Afghanistan from your point of view. Are you concerned that the US will not stay involved in this conflict? And what are the implications for India?

Prime Minister: I sincerely hope that the United States and the global community will stay involved in Afghanistan. A victory for the Taliban in Afghanistan would have catastrophic consequences for the world, particularly for South Asia, for Central Asia, for Middle East. The triumph of religious fundamentalism in Afghanistan would have far-reaching consequences for peace and stability in the world as well.

Interviewer: And that is what you think would happen if we do not go through with our commitment.

Prime Minister: Let me put it this way. The religious fundamentalism in the 1980s was used to defeat the Soviet Union. It is the same group of people. If they defeated the Soviet Union and now they defeat the other major power, this would embolden them in a manner which could have catastrophic consequences for the world at large.

Interviewer: So, if they defeated now the United States in other words, it would embolden them so they could do anything?

Prime Minister: Yes, that is right.

Interviewer: So, that is your concern about the future of Afghanistan.

Prime Minister: We have of course no immediate concerns because we are victims of terrorism. The extremist ideologies of the type that the Taliban have, if not checked, could destabilise our country as well.

Interviewer: In other words you would like to see the President send the troops as Gen. Mc Crystal has demanded.

Prime Minister: I am not an expert on military strategies. I am not well versed with what is the military situation on the ground though I got to hear that there are worries about the military situation. I have no fixed views about the amount or number of troops that the US would have. But it is very important that both for providing security and for providing sustained development the United States and the global community should stay engaged with Afghanistan.

Interviewer: Do you think that people in the US understand the connection between Al Qaeda and the Taliban in Afghanistan? Do you believe there is a close connection?

Prime Minister: There is a close connection. I mean they are the offshoots, they are chips of the same block.

Interviewer: You know some people say, “Oh! They are not”, but I understood they were very close, as you said.

Prime Minister: That is my honest view.

Interviewer: How do you feel about President Karzai? There has been a lot of criticism of him in America. I believe India has been supportive.

Prime Minister: Let me say that President Karzai’s regime is not perfect. There are imperfections, there are problems of improving governance. But you cannot transform Afghanistan overnight. It is going to be a long-term affair. Democracy as the west understands may be not possible to introduce in a short period of time in Afghanistan. But it is a fact that millions of Afghan children, millions of girl children are now in schools when none was in school when the Taliban was in power. For safeguarding human freedoms one has to take a balanced view. Now that President Karzai has been re-elected, I think the time has come when the global community should rally behind him to give Afghanistan a stable, purposeful, and relatively corruption-free administration.

Interviewer: Now, your neighbour to the north, Pakistan. How do you assess the situation there? Some people say that the civil government there is really losing power. How do you see the situation?

Prime Minister: We are concerned with the rise of terrorism in Pakistan. We have been the victims of Pakistan-sponsored terrorism for a long period of time. Now, if in addition, the Taliban and Al Qaeda type of terror, which in the past was located in the FATA area of Pakistan, gets transferred to the mainland of Pakistan - that is Punjab, which is next door to our Punjab - it has very serious consequences for our own security.

Interviewer: So, you say that the sort of instability in the FATA ...

Prime Minister: We would not like terrorism to lead to a situation where the civilian government is only a nominal government.

Interviewer: Do not you think that is the situation right now?

Prime Minister: I am not saying that is the situation now. We would like democracy to succeed in Pakistan. We would like the normal processes of democracy to operate in full measure in Pakistan. But obviously now that the Al Qaeda and the terrorists have a grip over several parts of Pakistan, that is a cause of worry to us.

Interviewer: It is terrible.

Prime Minister: It is terrible.

Interviewer: So, it is impossible to know but do you think that Pakistanis are trying as hard as they can? Or do you think they are not trying as hard as they can?

Prime Minister: Let me say that our feeling is that as far as Afghanistan is concerned I am not sure whether the US and Pakistan have the same objective. Pakistan would like Afghanistan to be under its control, under its strong influence. They would like the United States to get out as soon as possible.

Interviewer: Pakistan would like the US to get out.

Prime Minister: So, the US objective and Pakistan’s objective it appears to me are not the same.

Interviewer: Because Pakistan would like the United States to get out and the United States would like Pakistan to be under some control. Is that what you are saying, Prime Minister?

Prime Minister: What I am saying is that the United States objectives are to get Pakistan’s support to deal with the Taliban in Afghanistan. But I do not see Pakistan is wholeheartedly in support of action against the Taliban in Afghanistan. They are of course taking action against Taliban when they threaten the supremacy of the army. But that is it.

Interviewer: In other words they are only taking action against the Pakistani Taliban.

Prime Minister: That is true.

Interviewer: So, decidedly, possibly, India and the United States are able to cooperate in coming up with some kind of cooperation against the enemies of both India and the United States, which are the rest of the Taliban?

Prime Minister: Let me say that we have supported the strong presence of the international community in Afghanistan. We have provided substantial amount of resources, about 1.2 billion dollars, for the reconstruction and development of Afghanistan. We are of course not able to provide troops, but we would like to do more for reconstruction and development of Afghanistan. We believe we can do more in this area and do it more effectively than many other aid donors of Afghanistan.

Interviewer: You mean, for example, deliver supplies to, say, US and NATO troops? Or is that a bad example?

Prime Minister: We are active in building infrastructure in Afghanistan. We are involved in strengthening schools, education, healthcare, electricity. These are the areas where we have capacity to help Afghanistan, and we would like to do more.

Interviewer: I think people in America, reasonable people, actually do not understand what we are doing in Afghanistan. I would be curious to see what you think when you are in the United States. I am not talking about people in the State Department or the Defence Department but the general public which I think will be a problem for the President.

Prime Minister: I hope that the US public understands where it all started, after 9/11. If Al Qaeda did not have a home in Afghanistan, maybe 9/11 would never have taken place. God forbid if Al Qaeda gets another strong foothold in Afghanistan once again!

Interviewer: And that is what you believe will happen?

Prime Minister: Well, it could happen. I am not an astrologer. But there is a great worry that it could happen.

Interviewer: I think it is frustrating because there is not much understanding, I would say. America has very turned inward right now. Do you think there will be a civil war in Afghanistan if we withdraw?

Prime Minister: There is that danger.

Interviewer: From your point of view I assume that the most important thing is the terror groups in Pakistan.

Prime Minister: As I said we are victims of Pakistan-aided, abetted, and inspired terrorism for nearly 25 years. We would like the United States to use all its influence with Pakistan to desist from that path. Pakistan has nothing to fear from India. I have said this on many public occasions that the destinies of our two countries are interlinked. We should both be waging a war against poverty, ignorance and disease which afflict millions and millions of people in both our countries. It is a tragedy that Pakistan has come to this path of using terror as an instrument of state policies. We sincerely hope that the United States will use all its influence with the authorities in Pakistan including the armed forces of Pakistan to desist from this path.

Interviewer: You have a good point I have to say. But it is going to be very interesting to see what you come up with after your trip to Washington. On the US-India relationship, you said in the beginning, counter terrorism cooperation, space cooperation, do you see those on the agenda?

Prime Minister: Nuclear cooperation, cooperation in the field of education, closer linkages between the university systems of our two countries, cooperation in the field of health, working together to devise new vaccines.

Interviewer: How do you feel about Copenhagen and the emissions? Do you feel that we should send you equipment to deal with emissions?

Prime Minister: In accordance with the United Nations Framework Convention on Climate Change and the Kyoto Protocol the developed countries have an obligation to perform with regard to reduction of emissions. And I sincerely hope that Copenhagen would reaffirm that. I know there are difficulties. But without the United States giving a lead I do not see a deal at Copenhagen can become a reality. On our part we recognise our own responsibilities. Although our emissions are one/tenth of the United States’, about one/tenth of the global average, if I remember correctly, we recognise that dealing with climate change is the responsibility of entire humanity. So, we have put in place a National Action Plan to deal with climate change. We have eight Climate Change Missions which if they succeed will bring about a significant reduction in emissions as compared with Business As Usual situation.

Interviewer: Interesting! A lot of people in the US worry very much, and it is a subject of great talk, about Iran getting a nuclear weapon? I know that India has a much better relationship with Iran than we do. Are you concerned? I know another undeclared site was just found yesterday.

Prime Minister: I had yesterday the Iranian Foreign Minister with me.

Interviewer: In Delhi?

Prime Minister: Yes.

Interviewer: How exciting!

Prime Minister: He was in Delhi yesterday.

Interviewer: Ah! For a change!

Prime Minister: We did discuss the nuclear question. Let me say the message that he left with me was that they feel encouraged by the messages they are receiving from the Obama Administration. And I see a glimmer of hope in what the Iranian Minister told me yesterday.

Interviewer: Well, I guess so. It depends how you look on it. It depends what your aim is. Is your aim to stop Iran from getting a nuclear weapon or not?

Prime Minister: Let me say that we have taken a consistent position. Iran is a signatory to the NPT. It must have all the privileges that go with being a member of the NPT like peaceful uses of nuclear energy. It has also all the obligations that go with their membership of the NPT. Therefore, I think nuclear weapon is not an option which Iran is entitled to under its membership of the NPT.

Interviewer: You have much more information than I do, but it looks to all observers from the outside - including the IAEA which just found another undeclared site yesterday - it certainly looks - and appears even from the IAEA report - as if they are pursuing a nuclear weapons programme.

Prime Minister: I had the pleasure of the Director General of the International Atomic Energy Agency visiting us a few weeks ago. And he was not so sure that Iran is definitely working towards a nuclear weapon.

Interviewer: : It is interesting. The report that they issued yesterday - I do not know if you saw it, I could not sleep so I saw it in the middle of the night - was very very critical, the IAEA report.

Prime Minister: I have not seen that.

Interviewer: Well, unless you cannot sleep there is no reason you would. But they found another undeclared site and there was a particularly critical report issued. Now, I know that you were engaged in talks with Gen. Musharraf when he was Head of Pakistan for two years. Then, as far as I can understand, you went to Sharm el-Sheikh and you made some decorations that you hoped, just like you have just said, that Pakistan and India could maybe reach some kind of peace one day. Are there any kind of steps now or do you feel that the situation ...

Prime Minister: Let me say that we are committed to resolve all outstanding issues with Pakistan through purposeful, meaningful, bilateral negotiation. Our only condition is that Pakistan should not allow its territory to be used for acts of terror directed against India. This is the commitment that Gen. Musharraf had given to my predecessor when he visited Pakistan in 2004. This is the commitment that was given to me whenever I met Gen. Musharraf. This is the commitment given to me at Sharm el-Sheikh by Prime Minister Gilani. If Pakistan really honours that commitment, we can go back to purposeful, meaningful negotiations to resolve all outstanding issues between ourselves.

Interviewer: So, if you look at Mumbai and the Lashkar-e-Tayyiba, they are obviously not honouring the agreement.

Prime Minister: As far as the perpetrators of Mumbai massacre are concerned, they had taken some steps but not enough. As far as the Lashkar-e-Tayyiba is concerned, under a different name Jamat-ud-Dawa ...

Interviewer: They just left that guy out of jail, didn’t they?

Prime Minister: They have not put Hafiz Saeed in prison. The courts have released him. That is the excuse. But from our standpoint, Lashkar-e-Tayyiba, Jamat-ud-Dawa, Hafiz Saeed, Masood Azhar, are the perpetrators of terror in our country, and Pakistan has the obligation to take effective action to prevent them from continuing to indulge in these undesirable acts.

Interviewer: Do you worry about another Mumbai?

Prime Minister: Every day I receive intelligence reports that the terrorists based in Pakistan are planning other similar acts.

Interviewer: Terrible! The terrorists based in Pakistan are planning more?

Prime Minister: Yes, that is right.

Interviewer: Are there any contacts between your Government and the Pakistani Government?

Prime Minister: We have normal contacts. Our High Commission is there. They have a High Commission here.

Interviewer: But it is not like that channel that you had open.

Prime Minister: But we have very good cooperation with the US and we get lot of information from friendly countries, and that points to persistence of these terrorist groups – Lashkar-e-Tayyiba, Jamat-ud-Dawa – in acts of terrorism directed against our country.

Interviewer: How do you see China? Do you see it as a threat, do you see it as a trading partner, or both?

Prime Minister: Let me say that the peaceful rise of China creates new opportunities for the world to engage China. China has emerged as a major trading partner with us, and we welcome that. But we have problems with China with regard to our boundary dispute. We both have discussed this. We are engaged in a discussion of the boundary dispute. Both of us are agreed that it is a complicated issue, it will take time to resolve it, and that pending the resolution of the boundary dispute both of us have an obligation to maintain peace and tranquillity along the borders. I have said this in China and elsewhere, we believe that there is enough space in the world to accommodate the development ambitions of both India and China. But there will be certain areas where there will be competition in trade, investment; and that is healthy.

Interviewer: That is interesting. Since you are an economist, do you believe that the economic weakness caused by the disaster that struck us last year has eroded the United States’ leadership role in Asia or affected it?

Prime Minister: I sincerely hope that the United States will recover from last year’s disaster. With the entrepreneurial skills of the US business class, the innovation, the US educational system which encourages innovation and invention, I have no doubt that the US would overcome this temporary setback. We would like the United States to succeed in that effort.

Interviewer: Some people are saying even in the US that we have definitely lost some of our power, and some of our leadership ability due to the fact that we have such huge deficits.

Prime Minister: I have heard many times before. When I was in the United States in the late 1960s there was Prof. Robert Triffin at Yale who wrote a famous book Gold & the Dollar Crisis saying the dollar’s role as a reserve currency has come to an end and the United States must recognise this. That was said in 1968. Then of course came 1971 when the US went off the Gold Exchange Tender. But the United States bounced back. I hope that the same thing will happen once again.

Interviewer: But if you look at the objective facts, and you know much more than I do, I spent a lot of time with businessmen and they are all so worried.

Prime Minister: I think it is good that they worry about it because excesses of the type which characterised the US banking system last year should have been a cause of worry. They should have been detected much earlier.

Interviewer: You have got a point. But India seems to have basically ...

Prime Minister: First of all our banking system is better regulated. We do not allow our banking system to invest heavily in those types of assets.

Interviewer: You mean derivatives, CDOs, and squared and things like that. Your economy basically escaped from this.

Prime Minister: We are affected because our exports are affected. Our export growth rate has sharply declined. What is more is that the flow of capital has also been affected. But more recently, capital has started coming back to our country. Overall, before the crisis our growth rate was 8.5 to 9 per cent per annum in the previous four years.

Interviewer: Unbelievable!

Prime Minister: Since then it has declined to 6.7 per cent. This year it will be about 6.5 per cent. We believe that on the basis of domestic demand, both consumption demand and investment demand, in two years’ time we can go back to a 9 per cent growth rate. I say it with confidence because our domestic savings rate is as high as 35 per cent of our GDP.

Interviewer: : You are kidding! How did you manage that?

Prime Minister: Well, I think the Indian people are very thrifty.

Interviewer: : That is amazing!

Prime Minister: And with a capital output ratio of 4:1, we should over a period of time be able to sustain a growth rate of 8 to 9 per cent.

Interviewer: : That is unbelievable! If we could trade places with you! That is amazing! What is your take on the Maoist insurgency? What about the areas that people say are out of control? Your friend Montek Singh Ahluwalia was telling me last night that there are these forests and people are living in them and so on and so forth and then there are Maoists.

Prime Minister: It is certainly true that benefits of development have not reached all sections of our population. There are tribal areas in Central India where poverty is acute, and that is taken advantage of by these antisocial elements whom we call as the Maoists. We will tackle them. This is a dual strategy. First of all in these distant parts of our country the law and order machinery of the state cannot reach early. We are trying to strengthen that. Simultaneously we will ensure that the fruits of development hereafter are more equitably distributed so that the social discontent and unrest which is the result of this unequal development is also taken care of.

Interviewer: You mean some law and order and some spreading of the wealth would be the way out there?

Prime Minister: Accelerated development, yes.

Interviewer: When you look at your country and what you would like to achieve in the next few years, what is that?

Prime Minister: A growth rate of about 9 per cent per annum, and to ensure that this growth is an inclusive growth, that the benefits of development reach out to all sections of our population, that the disparities between rural India and urban India are reduced and ultimately eliminated.

Interviewer: Do you feel that you have made a difference as Prime Minister to your country? What do you think your legacy would be? Do you think that you have changed this country?

Prime Minister: I hope I have made some difference. That is for posterity to judge.

Interviewer: Well, what a hard job! Are you worried at all about the Test Ban Treaty which President Obama and his Administration seem very intent on pushing through the Senate?

Prime Minister: Why should we be worried? We are not worried at all. We have a unilateral moratorium on testing imposed voluntarily. We stand by that. And we would like to work with President Obama to promote the cause of global nuclear disarmament, a world free of nuclear weapons. I think that is a world which has been the dream of our leaders from Jawaharlal Nehru to Rajiv Gandhi. We would like to work with all likeminded countries to achieve that goal.

Interviewer: Is your last dream to build an infrastructure in India?

Prime Minister: Infrastructure is a primary requirement of sustained development. We need to invest lot more money, lot more resources in roads, in ports, in airports, in irrigation, in urban infrastructures. These are our top priorities. That is what I meant that if we get our infrastructure right, our savings rate would enable us to sustain a growth rate of about 8 to 9 per cent.

Interviewer: But the infrastructure is a priority.

Prime Minister: It is a priority.

Interviewer: Prime Minister, there is just no way I can thank you enough for your time. I know how busy you are getting ready for your trip.

Prime Minister: Well it is a great pleasure having you with us.

Interviewer: No, it is the other way round. You are such a wonderful country.

Prime Minister: And I hope you will come more often.

Interviewer: Thank you very much and I wish you such good luck with your ...


New Delhi
November 16, 2009


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