01 Mar 2008
India's Chidambaram Says Nation Is "Poor Rich"Re: Ratan Tata (AMP 71)Topics:
Just twenty years from now, India’s population of more than 1 billion people could be lifted out of abject poverty by the country’s growing economy, Palaniappan Chidambaram (MBA ’68), India’s finance minister, predicted in a speech at HBS in October. However, India remains a land of vexing contrasts and contradictions, with enormous inequities and problems juxtaposed with the resources and potential to overcome them, as Chidambaram outlined in his talk, “Poor Rich Countries: The Challenges of Development.”
Having gained its independence from Great Britain in 1947, India is a “young nation but an old civilization,” Chidambaram said, with a past that both enriches and burdens it. Although India is rich in natural and human resources, poverty nonetheless prevails — some 350 million Indians live on less than one dollar a day.
“The government of India faces the challenge of leveraging huge natural and human resources to ensure rapid economic growth,” Chidambaram declared. “We believe that growth is the best antidote to poverty. Without growth, India will remain a poor rich nation.”
Chidambaram said that India is still affected by the legacy of the “monstrous and rapacious structure” of previous Socialist governments, even though prime ministers Indira and Rajiv Gandhi began to chip away at that monolith in the 1970s and ’80s. (For his part, Chidambaram confessed that when he arrived at HBS in the mid-1960s, he too was a “confirmed Socialist” and still was when he graduated. His views changed over time, he explained, when he witnessed how “socialism stilled entrepreneurship and closed the doors to many people who wished to enter the marketplace.”) It wasn’t until India nearly went bankrupt in 1991 that the idea of “an open and competitive society was embraced by the people,” who, Chidambaram observed, brushed aside establishment warnings at the time about the dangers of economic reforms.
Education and health care are the country’s two most formidable challenges, Chidambaram observed. Stating that India must become “a knowledge society,” he noted that while the country is known for the talent its elite universities turn out, it is still not enough. China, for example, produces ten times as many Ph.D.’s as India. Basic education and technical and vocational training languish despite renewed government commitments.
The rich-poor gap in education is mirrored in health care — India boasts hospitals and clinics with state-of-the-art procedures and topflight doctors that have become destinations for “medical tourists” from the West. Meanwhile, the country’s infant and maternal death rates are high, and diseases such as cholera, dysentery, and malaria are still far too prevalent.
Chidambaram concluded by reciting a litany of contrasts showing India to be rich on the one hand and poor on the other. He noted, for example, that “India is rich because of its native entrepreneurial talent. It is poor because many policy and procedural hurdles stand in the way of its entrepreneurs.”
But he remained optimistic about the future. Pointing to the country’s “demographic advantage,” featuring a workforce that will be youthful for decades to come, Chidambaram said, “More and more Indians, especially young Indians, have discovered the virtues of an open polity and open economy. I have faith that the next generation of Indians, and the generation after that, will eliminate the scourge of poverty and make India rich. Then the poor country will have deserved its inheritance.”
Class of MBA 1968, Section B