INTERVIEW: MANI SHANKAR AIYAR 1

INTERVIEW: MANI SHANKAR AIYAR 1 Interview conducted by Dr. Klaus Voll, Advisor on Asia for the Foundation for European Progressive Studies (FEPS) and Kamakshi Nanda, Historian and Political Analyst. New Delhi, 5 November 2012 For further information please contact Ernst STETTER, FEPS Secretary General at ernst.stetter@fepseurope.eu or David KITCHING, FEPS Policy Advisor at david.kitching@feps-europe.eu 1 See his CV at the end of the interview. FEPS Rue Montoyer 40 B-1000 Brussels +32 2 234 69 00 www.feps-europe.eu

Member of Upper House of Indian Parliament for Indian National Congress In September and early October this year the ruling establishment in Delhi announced the opening of Indian markets to Foreign Direct Investments (FDI) in retail, airlines and insurance, in the backdrop of a slump in the economy and the social movement India Against Corruption (IAC) becoming political. 2

Subsidies in oil and diesel prices, the need for social welfare schemes for the teeming poor and pleasing corporate task masters is becoming a taxing task for the government. In the following interview 2 Former Union Cabinet Minister, Mani Shankar Aiyar, elucidates and reflects on how he understands the developing scenarios in India and the future of India-EU relations. Q1. How do you assess the current political situation in India and the emergence of a new political outfit, led by Arvind Kejriwal and some members of the movement India Against Corruption? A: While the India Against Corruption movement has certainly touched a sensitive cord in public opinion, I think it is highly unlikely that the new political party being proposed to fight corruption will have any real political impact. I think Kejriwal and his colleagues would have been better advised to continue their struggle from outside the system. But, of course, every Indian has the right to participate in our political life and I welcome this addition to close on 100 political parties already registered with our Election Commission. Q2. Do you see the country in political turmoil in the years to come or do you think the political party system is strong enough to withstand the pressures from extra-parliamentary and Hindu-chauvinist movements? Will it at the same time reform itself? A: All democracies face challenges throughout their terms of office, bar the traditional initial 100- day honeymoon granted by the media. So it is with us, and even in Nehru s day the government used to be buffeted from both within and without. So, I see nothing unusual in present conditions and am sure the political party system will withstand pressures from extra-parliamentary and Hindu chauvinist movements. Of course, reforming the political system from within is an urgent task and to some extent, will be taken up piecemeal. The larger task is to reconcile the dilemma of development and democracy which means providing for greater equity in our economic development model to match the equality of one person one vote which lies at the heart of our political development. Q3. Are the current economic reforms a proper answer to India s social and economic challenges? A: Economic reforms can, at best, accelerate one parameter of the development paradigm, namely, the GDP growth rate. Governance reforms, in particular Panchayati Raj 3, are critical to diffusing the fruits of growth to the vast majority of Indians some one billion of them, who are not on the high growth trajectory. Therefore, while higher growth might generate additional resources for poverty alleviation, it is only through governance reforms, particularly with regard to the delivery of public goods and services through elected local governments answerable to their respective local communities, that we can hope to see an answer to India s principal social and economic challenges, which are rooted in widespread poverty and deprivation. India s first priority should not be the pursuit of prosperity but the allaying of the worst aspects of poverty. Q4. What do these reforms of the Congress-led minority government mean for the wider Indian public and European businesses interests? 2 The on-line interview was conducted by Dr. Klaus Voll, Advisor on Asia for the Foundation for European Progressive Studies (FEPS) and Kamakshi Nanda, Historian and Political Analyst. 3 Village Councils. Mani Shankar Aiyar has been Minister of Panchayati Raj. 3

A: Your question has come about a month too early. Some of the reforms, such as the new land acquisition bill, require Parliamentary legislation. Other measures, such as FDI in multi-brand retail, might become the subject of controversial debate or even a No Confidence Motion when the Winter Session of Parliament begins at the end of November or early in December. Q5. Given the current slump in demand among Indian buyers, would European retailers be enthused to enter the Indian markets? Do you foresee a rush of European retailers opening up businesses in India? Or do you think that they will bide their time? A: Our government is pulling out all the stops to encourage foreign investment in India, including in the retail business. There is, however, considerable political opposition to these incentives. It would perhaps be made clear during the forthcoming winter session of Parliament as to whether the proposed moves are going to sail through or be stalled. While the serious economic downturn in the European Union does mean European business will be reticent about investment, there clearly are more attractive prospects in emerging markets than in home markets. Whether this will extend to India or be directed towards other emerging markets like China cannot be predicted with any certainty. But I think it would be fair to predict that some part of European private capital investment will take place in India notwithstanding a certain reduction of demand that comes out of the present slowdown in India s GDP growth rate. However, please note that even at the current figure of about 6% growth, Indian growth rates are far above those in Europe itself. Q6. How do you see the India-Europe Free Trade Agreement and the new economic policies proposed by the Indian government, in the larger picture of India s development? A: The Indian government is very seriously engaged in opening up its markets and a Free Trade Agreement with the European Union would certainly be an important step in that direction. Q7. Do you foresee any movements in India, which could herald fresh socialist and social democratic ideas and practices? A: The inescapable fact is that while India is a vibrant democracy, the course of economic development after globalization and liberalization which was introduced in 1991 indicates a widening gap between GDP growth rates and rates of poverty alleviation. During the period of the recently concluded 11 th Five Year Plan (2007-12), GDP growth has averaged over 8% per annum while poverty alleviation has recorded under 0.8% per annum. It has been estimated that there has been a doubling of the Gini co-efficient in urban India in the last five years. At least a billion people are poor or vulnerable. In these circumstances, the imperatives of democracy constantly impinge on the market and oblige any Indian government to take welfare steps of a socialist nature even if the government is unwilling to avow socialist policies. The alternative would be the collapse of democracy, as has already occurred in about 75 districts of the country that have been overtaken by extremist insurgency and in about 130 other districts which are partially affected by such Maoist insurgency. A wise government would, therefore, be well advised to undertake social democratic measures. Q8. Do you think that European social experiences in history, and the present potential comeback of Social Democracy in Europe, are of relevance for India in its current situation? 4

A: The European socialist experience is of the utmost relevance to India because we are attempting to replicate the European experience of rapid economic development in our own country. While the political and cultural environment in contemporary India is, in many ways, very different to the Europe of the 19 th or 20 th centuries, there are many lessons, both negative and positive, to be borne in mind while India accelerates its own development. Personally, I would welcome the renaissance of social democracy in Europe in the hope that this would lead to closer ties between India and the EU. Q9. Would you suggest a closer cooperation in foreign and global policies between India and the European Union? A:Although Article I of the Treaty of Rome emphasizes that only democratic countries can be members of the European Union, in its external relations the EU has never assigned to democratic developing countries like India the priority and preference it has accorded to non-democratic developing countries like China. If, therefore, there were greater recognition in the EU of the importance of cultivating cooperation between democratic India and democratic EU, that would be all to the good. However, so long as the EU and NATO continue to be virtually co-terminus, there would be self-imposed restrictions on the extent of cooperation on international political and security issues. Thus, India did not approve of the invasion of Iraq nor of the bombing, more recently, of Libya. Also, a European Union that is unable to accommodate a Muslim Turkey also draws lines of exclusion that make it difficult to promote greater emotional integration between the people of India and those of the EU. But, in purely diplomatic terms, incremental progress in India-EU relations is, of course, possible. Curriculum vitae of Mr. Mani Shankar Aiyar Born: Lahore, 10 April 1941. Education: Welham and Doon School, Dehra Dun; BA Economics Hons. St. Stephen's College, Delhi University, 1961 (Ranade Prize for standing first in the University); MA Tripos in Economics, Cambridge, UK, 1963. Served as Secretary, Cambridge Union Society, Easter 1963 (President Ken Clarke). Described by Cambridge Union contemporary, Norman Lamont, as the best speaker in the Union in his time. Other honours: D.Sc. (Honoris Causa), Indian School of Mines, Dhanbad, 2006; Honorary Fellow, Trinity Hall, Cambridge University, UK, 2010. Also the Chairman of the South Asia Foundation (India Chapter). Parliament: Elected to the Lok Sabha (Lower House) 1991-1996; 1999-2004; 2004-2009. Nominated by the President of India to the Rajya Sabha (Upper House) for a six-year term, commencing 2010. Conferred the Outstanding Parliamentarian Award, 2006, by the President of India. Served on the Standing Committee on Rural Development (1999-2004 and 2010 onwards), as well as the Standing Committee on Forests and Environment (1991-93), Human Resource Development (1993-96) and External Affairs (1993-96), besides the Joint Parliamentary Committees on the Constitution (73rd amendment), and the stock market scams of 1992 and 2001. 5

Ministerial career: Minister for Panchayati Raj (Rural local self-government), 2004-09 and, simultaneously, Minister for Petroleum and Natural Gas (2004-06); Youth Affairs and Sports (2006-08); and Development of the North-East Region (2006-09). Diplomatic career: 1963-89 Postings abroad: Brussels (1964-68 and 1973-76); Hanoi(1968-69); Baghdad (1976-78) and Consul General of India, Karachi (1978-82). At Headquarters: Under Secretary, Economic Division (1969-1970); Private Secretary to the Minister of Industrial Development and Internal Trade (1970-71); Deputy Secretary (Bangladesh-Economic), 1971-73; Head of External Publicity and Spokesman External Affairs, and Conference Spokesman, Seventh Nonaligned Summit, 1982-83; Head of Division, United Nations, 1983-84; Information Adviser to the Minister of Information and Broadcasting, 1984 (Aug-December); Head of the Americas Division, 1985 (Jan-March); Joint Secretary to Prime Minister Rajiv Gandhi, 1985-89, during which time he was in charge of liaison with the Department of Culture with regard to the Zonal Cultural Centres. Columnist: 1989-2004 with a host of magazines and newspapers, both in India and abroad. Publications: A Time of Transition: Rajiv Gandhi to the Twenty-First Century (Penguin India, 2009) Confessions of a Secular Fundamentalist (Penguin India, 2004) Rajiv Gandhi's India [4 volumes] (Ed. UBSPD, 1997) Knickerwallahs, Silly-Billies and Other Curious Creatures, a political lampoon (UBSPD, 1995) Pakistan Papers (UBSPD, 1994) One Year in Parliament (Konark, 1993) Remembering Rajiv (Rupa, 1992) 6