Manmohan Singh, India’s prime minister, spoke with Edward Luce, the FT’s South Asia correspondent, and Quentin Peel, international affairs editor, at the PM’s official residence in New Delhi. Mr Singh became prime minister in May after the Congress Party, led by Sonia Gandhi, the Italian-born widow of Rajiv, defeated the BJP-led coalition government.
The following is a transcript of the interview ahead of Mr Singh’s visit to The Hague on November 8 for the annual India-European Union summit.
Financial Times: In terms of India’s relations with the European Union, doesn’t it need something to get it onto a higher level – something to give it real impetus?
Manmohan Singh: The European Union is our largest trading partner. Also it is an important source of technology and capital and therefore in an increasingly inter-dependent world what goes on in Europe is of vital significance to our well-being.
But we face new challenges: the enlargement of the EU. We welcome the growth of the EU as a strong new pole of the world economy but the process of enlargement also applies to other areas that relate to Indian needs. Therefore we have a real reason to work with the EU to strengthen the multilateral trading system, which is based on non-discrimination.
The world today faces a common environmental challenge – global warming and so forth – requiring a new cooperation. India and the EU have a lot of things we can do together to meet the environmental challenge. Like the EU we are dependent on imported energy and what goes on in the world today, the growing instability of supplies, gives rise to new challenges and the quest for energy security assumes an importance in India’s scheme of things next to food security.
Q: But how can you cooperate with the European Union to make your energy supplies more secure?
A: The quest for energy security is second only in our scheme of things to food security. The producers must come to terms with reality that instability is not something which is conducive to the interests of either buyers or sellers. And the big influence the EU has as a big consumer of hydrocarbons – we both have a stake to create more orderly conditions in the world energy markets because energy security is of critical importance.
And we have scourges like Aids, growth of narcotics, illegal trafficking in human beings and the phenomenal upsurge in international terrorism which threatens the entire civilised world. We also have been victims of terrorism and modern democracies are often helpless to deal with these non-state actors.
These are factors that bring us together. They are global problems and they require global cooperation and therefore Indian relations with the European Union are of very great importance to us.
Q: On energy security, there has been talk of a gas pipeline to India from Iran that would come through Pakistan. Is there a way of delinking this from progress on other issues with Pakistan?
A: I and President [Pervez] Musharraf signed a joint statement in which we listed our joint interest in the development of this pipeline and it could be an important factor, though our view is that there are issues with regard to the security of supply. Also we felt it has to be viewed in the broader context of India-Pakistan networking of economic relations with this pipeline and many other sources of energy. We have been talking of a gas pipeline from Myanmar to our country. So we have to explore all these options.
Q: Is there an EU model in which you could base your thinking about opening up your relations with Pakistan – the whole model of creating an economic underpinning for a diplomatic rapproachment?
A: I certainly very much hope … the creation of the European economic union was a great act of far-sighted statesmanship. So I sincerely hope that economic ties and strengthening of economic relations with Pakistan would create in both countries the constituencies that would recognise that whatever our differences we would have to resolve them in a peaceful manner. And that is what I feel – there is a lesson from EU integration that the century old enmity between France and Germany can be resolved by working together. That is a very important lesson.
Q: Looking at the world – we face a much less stable world, especially in the last three years and on energy prices. How important is energy security to India generally, you have an inflation problem …
A: Energy prices are in some ways after food prices the key element of our price structure. So when they go up they do give rise to economic consequences which of course accentuate inflation and create new uncertainties. But sooner or later we have to pass the higher cost to consumers and that affects some of the most vital sections of our economy. We are trying to impart a scientific temper onto our agricultural sector, more emphasis on purchasing inputs like fertilisers, more emphasis on irrigation like tubewells. Now when the prices of diesel goes up this certainly has implications so it makes our task of controlling inflation certainly more difficult than it would otherwise be.
Q: The central element of your programme is good governance. How do you crack the problem that the reform of government means also the reform of state governments and yet you rely on many state governments for your coalition to survive?
A: That is not entirely true that we are relying on state governments. But India’s federal constitution makes it imperative for us to work with the state governments. The central government has enough instrumentalities, both the carrot and the stick – provided the central government knows its mind – to ensure that the reform process goes forward. My feeling is that we are going to succeed in that. We need a lot more decentralisation. There are several ways in which we can decentralise. One is relying more on market forces. The other is that there are certain functions that can only be performed at the local level or at the state level should not be taken over by the central government.
Now, Rajiv Gandhi had a vision that many of the problems that the people of India have with government are regarding the functioning of local government, therefore he brought the 73rd and 74th constitutional amendments, giving new life and new powers to the grassroots institutions of the Panchayati Raj. While we have partially succeeded, there is still a reluctance on the part of state politicians and state governments to transfer more powers [to the grassroots institutions].
Most people come into contact with government when they have to go to the state electricity board to get power, or to get their ration card for food, or pay their electricity bills, or in quality of the municipal sewerage systems. So reform of government can only be solved only by decentralisation and strengthening the Panchayati Raj institutions, giving them more power, both financial and administrative power, making these organisations financially strong and more accountable to the people at large. That is one part.
The other part is that function which the government performs: We should throw open government enterprises to greater participation in the market economy. Even if we retain units in the public sector, we would like many of these public sector units to have their shares traded on the national stock exchange. So there would be a market test: if they are not doing well this will be caught by the market forces. So these are the various instruments which we need to develop if we are to succeed in improving and instilling a new culture in our public system a commitment to excellence and to meet our concerns about social equity.
Q: Most people appear to agree with your proposed reforms of governance. But the one question they have is the speed with which you will achieve this – there seem to be a lot of new commissions and committees.
A: Well, commissions are only a means to generate wisdom. What needs to be done, by and large we already know. Today I am meeting the chief secretaries of the states. What needs to be done is fairly clear and fairly obvious. We don’t have to wait for the reports of the commissions to take corrective and remedial action in many areas.
Q: On Pakistan, you had a very good one-to-one meeting with General Musharraf in New York in which you said you were open to any options he put forward. And yet last week when he made a proposal on Kashmir it was peremptorily dismissed by India. Is that fair to Gen Musharraf given the risks he is taking?
A: Our position is that so long as Pakistan remains committed to the January 6 statement, which was jointly issued by Gen Musharraf and by the former prime minister Vajpayee – that territory under the control of Pakistan will not be used to promote cross-border terrorism – we are willing to look at all possible ways of resolving all outstanding issues and that includes Jammu Kashmir.
I believe that when dealing with seemingly intractable problems one has to be confident of one’s own sincerity in trying to find a solution. This was my perspective when I had a very useful hour-long meeting with President Musharraf on the margins of the UN General Assembly on September 24. This provided us an opportunity to get to know each other.
Now President Musharraf has been … realistic enough to say that solutions that are not acceptable to India should be out and solutions that are not acceptable to Pakistan should be out, and I said to him that I would like to hear suggestions from him. So we welcome various suggestions. We are dealing with complicated issues. There is such a thing as history behind us and there are also realities on the ground. Taking all this into account we are willing I think to look all options. To think about a new chapter and a new beginning between our two countries.
Q: There are two rather dramatic processes that have been happening. One, India’s economic growth and opening up in the last 10 years which means you want more trade and open borders. Pakistan, on the other hand, has had the shock of the overthrow of the Taliban and the whole focus on terrorism. Therefore there are real possibilities of movement.
A: A strong stable and prosperous Pakistan is in our interest. We don’t want any of our relations to enter the category of a failed state. We have a vested interest in Pakistan’s prosperity.
Q: It’s a very good moment for movement isn’t it?
A: Well, I share that feeling when I signed that statement I stated as much in the thoughts that I put into that statement. The atmosphere is right and we must build on that atmosphere to begin the new chapter in the relationship between the two countries.
Q: There is in India a strong resistance to internationalising the Kashmir issue. And yet there is a strong interest in Europe and America in a solution.
A: As friends, we discuss all issues and we are living in a world where distance is lost. But it is our honest belief that in the relationship between India and Pakistan if a durable solution is to be found it cannot be imposed from outside. It has to be a solution in which both countries genuinely believe it is in their own best interest. Therefore we believe that bilateral negotiations are the best means to resolve the outstanding problems.
Q: People focus on the role of the communists in your coalition, but we’re at a moment when the opposition BJP is very weak. Does this give you an opportunity to get things done?
A: It is the duty of our government to provide leadership but we are dealing with very sensitive issues and, given the history of these problems, we have to evolve a broad-based national consensus to move forward. It will be my effort towards the opposition to convince them that what we are doing is in our national interest.
Q: Do you worry that the BJP in opposition is returning to hardline Hindu nationalism?
A: Well, it is very worrisome – it is very worrisome. One had hoped that six years in office would convince the BJP leadership that India’s best interests are safeguarded through the strengthening of Indian institutions and by moving to an inclusive economy and beyond a feudal society. I recognise that political compulsions sometimes overwhelm. But recent signs that have been made at the BJP meetings are not very welcome developments. But I still hope that the current leadership of the BJP does recognise what are the imperatives of the situation.
Q: A lot of people outside of India are worried that your communist allies could act as a drag on economic reform – insurance and telecoms liberalisation appear to be held up. There are also worries that you will be engaged in a kind of permanent crisis management with the left. What do you say to those fears?
A: Well, the proof of the pudding will be in the eating. We are engaged in a healthy debate on the pros and cons of many issues. I am constantly in touch with leaders of the left parties and am convinced that have a reasonable appreciation of what is possible and what is not. It is wrong to interpret a democratic debate as “permanent crisis management.”
In the long run a reform programme that has the widest possible social and political support is more enduring. I would like the world to appreciate the fact that we have been successfully carrying out reforms for over two decades within a democratic framework. Few countries in the developing world have been able to implement such far-reaching reforms within the framework of a parliamentary democracy. Public debate and dissent is a source of strength for us, not a source of weakness.
I am pretty confident that our government will last for a full term, that it will be a responsible government and a forward-looking government and I have every reason to believe that the left will not be an obstacle. They have their concerns and these concerns about social equity and the reform process doing something to uplift the poorest sections of our society, I think these are concerns that are close to my heart as they are to the hearts of the left.
Now, we sometimes differ about the mechanics, the modalities of how to get there. But the last six months that I have been working with them, I am pretty confident that we can evolve a meaningful and forward-looking consensus – of that I have no doubt. I find great confidence in my own belief and the conviction among the left, that this government must stay the whole five-year term to fulfill its mandate. That I think will keep this government on the reform path.
Q: When you met President George W. Bush in September, did you raise the issue of outsourcing to India and the apparent backlash? And what would be your main priority for phase two of the Next Steps partnership with the US? Would you see the US as a “natural ally” of India?
A. We do not see outsourcing as an India-US issue. We believe that outsourcing is mutually beneficial and an integral element of globalisation. It is based on basic economic principles and premised on competitiveness and comparative cost advantages. I do hope that an objective view would emerge which would see this as a win-win situation for both countries, and in fact for all countries involved. Any suggestion that this is an effort to attract jobs away or to deprive workers of their livelihood – and to link this to possible conditionalities – contradicts the momentum of globalisation and trade liberalisation.
The Next Steps in Strategic Partnership (NSSP) between India and the US is an ongoing process. The first phase of this was concluded in mid-September and now both sides are working on modalities to implement the subsequent steps. We have set in place mechanisms that involve regular meetings and contacts to ensure speedy implementation.
In the joint statement issued after my meeting with President Bush in New York, we emphasised the priority that we attach to moving forward on the entire gamut of our relations expeditiously. We also noted that our relations are closer than ever before and set the directions for further development of a bilateral strategic partnership. I told President Bush, and he agreed with me that the best in India-US relations is yet to come. There is a joint perception that a strong partnership between India and the US, with our shared values and interests, and encompassing working together in international fora would strengthen global security and stability.
Q: Our last question is on China. It is amazing how much India-China ties have opened up over the last few years. What progress would you like to see further and would you like to see next – perhaps opening up the land border to get closer trade infrastructure ties?
A: Well, our economic relations with China have grown very substantially – I think trade is now $10bn. We are very determined that notwithstanding the border problem, we should not allow the border problem to stand in the way of the further development of our economic relations.
But even with regard to the boundary question, we want to carry forward the process. We have set up special facilities, our two countries’ special representatives have met and will be meeting again next month to evolve a framework for resolution of the boundary question in the wider background of political relations between our two countries. I am looking forward to welcoming the prime minister of China early next year so I take a very optimistic view of development in our relations.
