New York
September 21, 2005
CHARLIE ROSE, HOST: Welcome to the broadcast. Tonight, P. Chidambaram. He is the finance minister of India and one of the people that has shaped the economic miracle in that country. We`ll have a conversation about it.
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P. CHIDAMBARAM, FINANCE MINISTER, INDIA: It`s good that four parts out of seven of the world`s population is on the path of reform and progress and prosperity. Is it good to have China and India among the poorer countries? Or is it good to have China and India among the more prosperous countries?
CHARLIE ROSE: The more prosperous.
P. CHIDAMBARAM: Yes. I think it`s good for the world. So, what`s happening is other centers of economic growth are emerging. Others will emerge. Brazil will emerge as a center. South Africa has the potential to emerge as another center of economic growth. But because of China and India`s population, their impact will be much greater.
CHARLIE ROSE: P. Chidambaram is India`s finance minister and has held this
position since 2004. He`s a graduate of Harvard Business School, a corporate
lawyer, also served as finance minister between 1996 and 1998. Prior to that, he was commerce minister in the early 1990s, when India began to liberalize its economy. Today, India has the second largest growing economy in the world. It`s expected to expand at over 7 percent this year. The country also has the world`s second largest population. Seventy percent are below age 35 and almost 50 percent are 25 and under. India has a growing middle class of over 250 million people. It is one of the world`s largest energy consumers.And the question today is whether India is destined to become the largest economy in the world in some 50 years. I am pleased to have India`s finance minister at this table for the first time. Welcome.
P. CHIDAMBARAM: Thank you.
CHARLIE ROSE: As I said to you as we sat down, we hoped in a sense to see
India and its role in the world and how you see the world through your eyes, and - and vantage point that you have. Tell me how this economic miracle happened. What happened when the present prime minister was finance minister and you were the commerce minister, and you decided that India had to change? It had to engage its economy in a different way?
P. CHIDAMBARAM: Well, it was a combination of many factors. The most
important one was that we faced a financial crisis, a balance of payments crisis. And therefore, we had no option but to take some steps to ward off that crisis. Secondly, I think serendipitously, where the right people are in the right place. Some of us had reflected on India`s economic situation for a long time and were determined to make the changes, when the opportunity arose. For example, as a lawyer, I was familiar with India`s export-import regulations. And long before I became commerce minister, I had told -- and as it happens, I told the officer who was designated as a chief controller of imports and exports, that if I ever became commerce minister, the first thing that I would do is abolish his job. So some of us had thought about it earlier.
CHARLIE ROSE: Yes.
P. CHIDAMBARAM: And when the opportunity came, there was a crisis and
there was an opportunity. We seized it. We made the changes.
CHARLIE ROSE: And how do you see -- we`ll jump around here - but so the
challenge today. You`ve been growing at about 7, 8 percent for how long?
P. CHIDAMBARAM: Well, yes and no. Our average growth has been about 6.5
percent. We grew at 7.5 percent for three years in the mid-`90s, and since 2003 we again seem to be averaging 7 percent growth.
CHARLIE ROSE: And the future?
P. CHIDAMBARAM: Well, 7 percent growth is now the bare minimum. We must
deliver 7 percent year after year, and we must aim at 8 percent. If all goes well, we think we can maintain a 7 percent growth over the next 10 years to 15 years.
CHARLIE ROSE: And that will make, just so the people understand the impact of what we`re talking about, India the second largest economy in the world?
P. CHIDAMBARAM: Not quite. It will make India the third or the fourth largest
economy in the world.
CHARLIE ROSE: The U.S. will be first; China will be second.
P. CHIDAMBARAM: Japan.
CHARLIE ROSE: Japan will be third.
P. CHIDAMBARAM: . and India will be competing for the third and fourth place.
CHARLIE ROSE: And over the long run, do you believe India will, say, in 50
years, have perhaps the largest economy in the world?
P. CHIDAMBARAM: I can`t say that, because China is an equally important
player. And it has -- it is already an economic powerhouse. We will be among the largest economies in the world. It`s not important whether we are one or two. What is important is that we continue to remain an economic powerhouse, and that we raise per capita incomes. So the difference between the U.S. on the one hand and China and India on the other is the per capita income in China and India will not rise to the level of the U.S.`s, even if the size of the economy rises because of the large population, so we have to look at the distributive side also.
CHARLIE ROSE: Let`s just look at that now, because you`ll know these numbers. What is the per capita income in China today?
P. CHIDAMBARAM: Over $1,000.
CHARLIE ROSE: Per person?
P. CHIDAMBARAM: Per person, yes.
CHARLIE ROSE: India?
P. CHIDAMBARAM: $700.
CHARLIE ROSE: $700 per person .
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: . per - per year?
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: And in the United States?
P. CHIDAMBARAM: Oh, I think $30,000.
CHARLIE ROSE: Per person?
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: $30,000 .
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: . versus $700.
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: . versus $1,000.
P. CHIDAMBARAM: Um-hum.
CHARLIE ROSE: India will be ...
P. CHIDAMBARAM: But this is nominal. If you look at purchasing power parity ...
CHARLIE ROSE: Aggregate purchasing power?
P. CHIDAMBARAM: No, if you look at per capita on the basis of purchasing
power, how much the rupee can purchase and how much the dollar can purchase, in their domestic economies, you will have to multiply China`s and India`s by a factor of four or five. So the comparable numbers would be $30,000-plus for the U.S., say $4,000-$5,000 for China and say about $3,000 for India.
CHARLIE ROSE: Is there anything -- you`ve got huge poverty.
P. CHIDAMBARAM: Um-hum.
CHARLIE ROSE: You have an infrastructure that`s not as good as China`s.
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: Would you argue about that or not?
P. CHIDAMBARAM: Physical infrastructure not as good as China`s, but financial infrastructure .
CHARLIE ROSE: Better?
P. CHIDAMBARAM: . good or better than China`s.
CHARLIE ROSE: . meaning by that, regulations .
P. CHIDAMBARAM: Yes. Banking.
CHARLIE ROSE: . central banking.
P. CHIDAMBARAM: Insurance.
CHARLIE ROSE: Insurance.
P. CHIDAMBARAM: Regulations is much better.
CHARLIE ROSE: What do you worry about, sitting on top of this economy,
growing at 7 percent, destined to be one of the great economies in the world, yet at the same time this huge level of poverty?
P. CHIDAMBARAM: Well, I - I can tell you what I worry about, but not because
we don`t have the answers. We think we have the answers. What we need to do is continue to grow India at a rate of 7 or 8 percent a year, appropriate large portion of the surpluses to deal with poverty issues, so that even as we grow as an economy, per capita will rise.We need to address issues of education, health care, drinking water, sanitation, roads in our villages, to take care of the minimum needs of our poor people. That can be done, provided we grow at 7 to 8 percent and appropriate resources to deal with these issues.
CHARLIE ROSE: What role will energy play and oil play in your growth?
P. CHIDAMBARAM: Very critical role. We need to vastly add to our generating
capacity for power. We need to add, in fact, if numbers mean anything, 10,000
megawatts of additional generating capacity every year for the next 10 to 15 years.
CHARLIE ROSE: Sounds like nuclear to me.
P. CHIDAMBARAM: It`s the only other country, I mean apart from China, which needs to add.
CHARLIE ROSE: Yes.
P. CHIDAMBARAM: All other countries are reasonably self-sufficient in power
today. Germany does not need to add even one megawatt.
CHARLIE ROSE: How about Japan?
P. CHIDAMBARAM: Japan is self-sufficient in power.
CHARLIE ROSE: OK.
P. CHIDAMBARAM: And therefore .
CHARLIE ROSE: They don`t have to import a lot of oil?
P. CHIDAMBARAM: No. Importing oil is one thing, but generating electricity is
another.
CHARLIE ROSE: Right. The capacity to generate the electricity, once you have the oil or whatever fuel source you need.
P. CHIDAMBARAM: We need to add capacity. That`s the kind of infrastructure
requirements India has. I could give you numbers for roads, for railway, for power, for telecom. Each one of them is a mind-boggling number. Therefore, in the next 10 to 15 years, all the investment opportunities, especially in infrastructure, are to be found in China and India, and maybe one or two other countries.
CHARLIE ROSE: There are those who say - and I read this this afternoon. You
know, first it used to be China and then India. Then it was China or India. And now the conversation is China and India.
P. CHIDAMBARAM: I would agree with the last. I hope it will never become
China versus India. I think it`s China and India. People realize that there are
opportunities in both countries. There is enough capital that can flow into both China and India. And I think it`s good to have two large economies in Asia as -- competing with each other.
CHARLIE ROSE: One of your leading industrialists, Mr. Mukesh Ambani from
great Reliance Industries, which I think contributes about 3.4 percent of your gross domestic .
P. CHIDAMBARAM: That`s right.
CHARLIE ROSE: . product.
P. CHIDAMBARAM: That`s right.
CHARLIE ROSE: It`s a huge company.
P. CHIDAMBARAM: It is.
CHARLIE ROSE: Said to me over the weekend at a conference I attended, "the
key to the future is the demographics, and the key to the demographics is humanresources." And that`s where India will be strong, in the intelligence and the number of software engineers and the number of - of scientists that it trains to be able to give it a technological shove.
P. CHIDAMBARAM: He`s right. That is our strength, but that is not sufficient. Our human resources are outstanding. We have 2.5 million people graduate out of university every year. There are thousands of Indians.
CHARLIE ROSE: 2.5 million of a population of ...
P. CHIDAMBARAM: Of a billion...
CHARLIE ROSE: A billion-plus.
P. CHIDAMBARAM: Thousands of engineers come out. Thousands of doctors
come out. That is our strength. And India is the only large country in the world -- and that includes China -- the only large country in the world where the size of the working-age population will increase over the next 20 years before it begins to decline.
CHARLIE ROSE: Why is that?
P. CHIDAMBARAM: Because we`re a very young population.
CHARLIE ROSE: Right.
P. CHIDAMBARAM: Fifty percent of India is under the age of 25.
CHARLIE ROSE: Whereas China has a very different situation .
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: A, because of their birth policy.
P. CHIDAMBARAM: Well, China -- yes, one of the reasons is their birth policy.
They have an aging population. Now they are trying to encourage people to have more children.
CHARLIE ROSE: After for a long time .
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: . having restrictions against having more than one.
P. CHIDAMBARAM: Yes. More than one. And those restrictions remain even
today. Therefore, India will have a huge advantage, which is described by
demographers as the demographic dividend of India. But that is not enough. It`s not enough to have a human resource. What you need is financial resources and infrastructure. So I would say that the two key determinants of growth are greater investment, and the bulk of that investment flowing into infrastructure. If we`re able to manage investments and direct those investments into infrastructure, we`ll be well on our way to become an economic powerhouse.
CHARLIE ROSE: And being able to do all the things that you ought to do to
effect the quality of life of your people?
P. CHIDAMBARAM: You see, poverty cannot be abolished by waving a magic
wand, nor by slogans. Poverty can be abolished only if we address the causes of poverty. The causes of poverty are largely income poverty. And income poverty is because there are no jobs. So one has to create jobs, which will give them reasonable incomes.
CHARLIE ROSE: And create educational opportunities that will give them an
opportunity to have the best jobs that pay the most money.
P. CHIDAMBARAM: This can come only by investing. We have to invest in
education, invest in health care to take care of their needs to become productive citizens. But equally we have to invest in infrastructure: roads, power, telecommunication, petroleum, energy -- the whole works. Therefore, investment is the key, social sector as well as the physical sector. And within the physical sector, infrastructure is the key.
CHARLIE ROSE: There are those who argue that the reforms that have taken
place, that there`s some call in India to pull back on those reforms.
P. CHIDAMBARAM: India is a democracy. We have to accommodate every point of view.
CHARLIE ROSE: Political .
P. CHIDAMBARAM: We can`t snuff out or stifle any point of view. But take it
from me, the vast majority of Indians support reforms.
CHARLIE ROSE: And when they say -- you say reforms, what do you mean?
P. CHIDAMBARAM: Well, it means different things to different people. What it
means to the government is economic reforms, throwing (ph) up surpluses, which will lead to reforms in the social sector. So reforms does not mean only privatization and foreign direct investment and stock market and share prices. That`s one part of reform. The real reform is in being able to take the benefit to the people of India.
CHARLIE ROSE: The benefit of the economy?
P. CHIDAMBARAM: The benefit of economic growth.
CHARLIE ROSE: Yes. And you consider that to be health care and education .
P. CHIDAMBARAM: Health care, education .
CHARLIE ROSE: . and infrastructure, and .
P. CHIDAMBARAM: . drinking water, sanitation. Leisure activity. Roads, housing. These are the things that are required. Reforms are only a means to an end. The end is improving the quality of life of our people, both as human beings and as productive citizens.
CHARLIE ROSE: Are you going to have -- for example, Congress passed, your Congress, a bill that guarantees every rural household in India as least 100 days of paid employment.
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: That`s a hefty bill for the government.
P. CHIDAMBARAM: Well, there are some caveats. It is only manual labor; it`s
unskilled labor. It`s meant to be a safety net for agricultural workers and rural
unemployed who do not find jobs when the farming season is over. And that means about five or six months a year. So what we are guaranteeing is 100 days of employment per household. So that there`s a safety net. People don`t die of hunger. People are not denied food. And I think it`s very important in India, where a little over 250 million people live below the poverty line, which is earn less than $1 a day.
CHARLIE ROSE: How many?
P. CHIDAMBARAM: Less than a dollar a day.
CHARLIE ROSE: I know. How many, 250 million?
P. CHIDAMBARAM: Two hundred and fifty million.
CHARLIE ROSE: Earn less than $1 a day?
P. CHIDAMBARAM: Um-hum.
CHARLIE ROSE: How do they subsist?
P. CHIDAMBARAM: Well, they don`t. You see, many of them go hungry to bed.Sometimes you find when there is a drought or a famine-like conditions, people commit suicide. There are children who are malnourished, mothers who are undernourished. Therefore, in order to deal with that kind of poverty, which afflicts, say, about one quarter of India, it`s necessary to provide an employment guarantee program.
CHARLIE ROSE: Is your government more welcome to foreign investment than
the Chinese government? For example, an American company cannot own more than 50 percent of a Chinese energy company; oil company.
P. CHIDAMBARAM: Well, we have our own rules and regulations for FDI, in
some ways we`re .
CHARLIE ROSE: Foreign direct investment?
P. CHIDAMBARAM: Yes. Better than China. In some areas, we are more
restrictive.
CHARLIE ROSE: Give me an example of both.
P. CHIDAMBARAM: Well, for example, in power, 100 percent foreign direct
investment is permitted in India.
CHARLIE ROSE: Because you want power investment.
P. CHIDAMBARAM: Yes. In telecom, we permit 74 percent. China does not. But in some other.
CHARLIE ROSE: So a company can own up to 74 percent of a telecom
company.
P. CHIDAMBARAM: A foreign .
CHARLIE ROSE: Right. A foreign company.
P. CHIDAMBARAM: Yes, a foreign company can. But in some areas, China is
more open.
CHARLIE ROSE: Like?
P. CHIDAMBARAM: Like I believe they`re more open in banking and insurance
than we are.
CHARLIE ROSE: An American bank could own what percentage of an Indian
bank?
P. CHIDAMBARAM: Well, an American bank can own up to 74 percent of an
Indian bank.
CHARLIE ROSE: Yes.
P. CHIDAMBARAM: That`s over a period of time and subject to regulatory
requirements. But an American bank can open a branch in India. It can establish a wholly owned subsidiary in India. But if it wants to buy into an Indian bank, than its ownership is limited to 74. And its voting .
CHARLIE ROSE: But 74 is not bad, I mean .
P. CHIDAMBARAM: But catch is, its voting rights are limited to 10 percent.
CHARLIE ROSE: A-ha! That`s power.
P. CHIDAMBARAM: That`s what I`m trying to say.
CHARLIE ROSE: Yes.
P. CHIDAMBARAM: In some areas, China is better. In some areas we are
better.
CHARLIE ROSE: What shaped your economic views? Was it your education in India? Was it your education in Harvard Business School? Was it the experience you had after you went back?
P. CHIDAMBARAM: When I left Harvard Business School, I would have been
described as a socialist.
CHARLIE ROSE: And what happened?
P. CHIDAMBARAM: Well, I was -- I started life...
CHARLIE ROSE: But this is when you left the business school.
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: Clearly, they had no impact on you in Cambridge.
P. CHIDAMBARAM: Well, they did -- they did teach me .
CHARLIE ROSE: They taught you how to count - I mean, they taught you the
language of finance. That`s all they taught you? Or leadership, too, and management skills.
P. CHIDAMBARAM: They taught me business.
CHARLIE ROSE: But they didn`t affect your economic philosophy.
P. CHIDAMBARAM: Not too much. When I went back and I started my career as a lawyer, and a trade union leader, that gave me -- that opened my eyes to the real world. And then I realized that the government could do certain things well, but it could not do certain things as well. And the government had no business to be in many areas where it is, and that the private sector was a far more efficient instrument to convert savings into resources, productive resources, and .
CHARLIE ROSE: You discovered this as a trade union organizer and advocate?
P. CHIDAMBARAM: Yes, and a lawyer -- and a lawyer. And I -- my exposure to laws made by government, many of them foolish laws, ridiculously outdated laws. These laws had to go. I gave you an example of export-import regulations, which I think were .
CHARLIE ROSE: Yes.
P. CHIDAMBARAM: . completely outdated in a modern world. So that
experience, the real-life experience moved me more to the center of the road.
CHARLIE ROSE: The prime - Prime Minister Singh is -- deserves enormous
credit for what he did as finance minister.
P. CHIDAMBARAM: Undoubtedly.
CHARLIE ROSE: That`s where it turned the corner.
P. CHIDAMBARAM: Yes. Tremendous courage.
CHARLIE ROSE: What, courage?
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: Will this economic power affect the way India conducts its
foreign policy?
P. CHIDAMBARAM: On the contrary .
CHARLIE ROSE: Will it have an impact?
P. CHIDAMBARAM: On the contrary, an open society and an open economy
makes India a responsible player in the area of diplomacy and foreign policy. We will work with the countries of the world. Western countries will not look upon us with suspicion as they did when we were a socialist nation. We can work with Europe; we can work with Asia. We can work with emerging Africa. We can work with emerging Latin America.
CHARLIE ROSE: Can you work with Pakistan?
P. CHIDAMBARAM: We can. In fact, we do work with Pakistan. We offer most
favored nation status to Pakistan, which means non-discriminatory status to
Pakistan, as we do to any other country. It`s Pakistan which does not offer the similar status to India. We offer to export our rice, our cotton, our products to Pakistan. It`s Pakistan which puts in place non-tariff barriers. We are willing to negotiate with Pakistan, say, a trade agreement so that both countries can reduce their customs tariffs vis-a-vis each other. We offered to resume the bustling between Pakistan and India. And we have offered to resume the railway between Pakistan and India. And we can work with Pakistan. There`s no difficulty at all.
CHARLIE ROSE: What`s your relationship with Iran?
P. CHIDAMBARAM: Good as two countries and two old civilizations go. But there are some differences, I`m told, on the nuclear issue.
CHARLIE ROSE: But - and what - what are the differences?
P. CHIDAMBARAM: Well, I`m not ...
CHARLIE ROSE: The foreign minister.
P. CHIDAMBARAM: . qualified to speak at length on the differences, but I think
we would like Iran to comply with all international obligations.
CHARLIE ROSE: Non-Proliferation Treaty.
P. CHIDAMBARAM: Including non-proliferation. India is a non- proliferator. We
have never, never shared our nuclear technology with any other country.
CHARLIE ROSE: How close did India and Pakistan come to, several years back,
in terms of the possibility of exchanging a nuclear attack?
P. CHIDAMBARAM: Oh, never.
CHARLIE ROSE: Not even close?
P. CHIDAMBARAM: You see, when the nuclear explosion took place and the
PGP-led government announced that we are now a nuclear power, we were already in verge of that status some years ago. Be that as it may, it was quite clear that neither country could actually use nuclear weapons. It would have caused enormous destruction on both sides of the border. It is a deterrent. And we have voluntarily said, we will never use it first. We will never exercise the right of first use.
CHARLIE ROSE: Should we fear Iran having a nuclear weapon?
P. CHIDAMBARAM: I don`t know that Iran has one today or has the capacity.
CHARLIE ROSE: The assumption is that they`re developing the capacity, not
that they have one.
P. CHIDAMBARAM: . or has the capacity to produce one. Speaking for myself,
not for my government, I would not like nuclear weapons to be held by too many
countries.
CHARLIE ROSE: Because there`s always the chance .
P. CHIDAMBARAM: There`s always the chance .
CHARLIE ROSE: . the more that have the weapon, the more that it could fall into
the wrong hands, or something like that.
P. CHIDAMBARAM: It could fall into rogue hands. But I think every country has
the right to access nuclear energy for civilian purposes. And I think the nuclear
powers of the world must ensure that the right of a country to access nuclear power for civilian purposes is allowed, is maintained. You can`t deny people nuclear power. Especially in -- when fossil fuels will be exhausted someday, and prices are outrageous as they are today. Nuclear power is important. France depends on nuclear power. Japan depends on nuclear power. And why not other countries of the world, especially the developing countries?
CHARLIE ROSE: Well, the argument that the Iranians make is that we would like to have nuclear power because other countries do, and that means also that we can sell our oil at a very high price, and it brings revenue to our economy that otherwise we wouldn`t have.
P. CHIDAMBARAM: As I said, I can`t speak for the government`s policy. All I can
say is that Indian government is opposed to nuclear proliferation.
CHARLIE ROSE: And doesn`t want to see Iran have a nuclear weapon. It won`t
do anything.
P. CHIDAMBARAM: Well, it would like Iran to comply with all international
obligations, but at the same time, I think the Indian government would like developing countries to be able to access nuclear power for civilian nuclear purposes.
CHARLIE ROSE: How - how -- what`s going to happen to oil prices?
P. CHIDAMBARAM: They`re outrageous. I wish you would tell your viewers on
the show how this is a way to impoverish developing countries.
CHARLIE ROSE: You tell us.
P. CHIDAMBARAM: I`ll tell you. What is the difference between the old colonial
regime, when colonial powers exploited the colonies, took away their cotton, took away their iron, or took away their mineral wealth and left them de-industrialized? What is the difference between that and today, when all oil-importing countries are being impoverished? Three years ago, the price of oil was $28 a barrel.
CHARLIE ROSE: But what you didn`t -- let me just add to your point here. And
the demand for oil, and especially in India and China, is one of the principal factors driving it up.
P. CHIDAMBARAM: That`s the argument.
CHARLIE ROSE: You don`t believe that?
P. CHIDAMBARAM: It`s not entirely true. There is growing demand in China and India for oil, but that is to be expected. Developing country means it is developing. Therefore, its demand for oil goes up. But pricing of that oil must depend upon supply and demand, and your capacity to produce more oil.
If you have a cartel, the cartel caps production, deliberately keeps the gap
between supply and demand very, very narrow, and charges outrageous prices. Is it anybody`s case that given today`s supply-demand gap and the current level of production, there is no profit to be made if oil is priced, say, at $40 a barrel?
CHARLIE ROSE: You`re saying there`s plenty of money to be made at $40 --
$40 a barrel.
P. CHIDAMBARAM: So, why are they making it at $70 a barrel? Because they
make super profits.
CHARLIE ROSE: And you are saying that if OPEC would simply uncap
production ...
P. CHIDAMBARAM: Or moderate prices at which they are profitable.
CHARLIE ROSE: So they would - they would shrink their - their margin of
profitability.
P. CHIDAMBARAM: No, they would make the profits they used to make three or four years ago. They would not make these super profits. This is impoverishing developing countries. An IMF study put out three days ago says that even developed countries are hurting. That increase in oil prices hurts their GDP by 0.5 percent.
CHARLIE ROSE: The chairman and CEO of Exxon .
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: . is coming to this table for his interview about his retirement.
He`s been here for two other programs. Lee Raymond. I would assume you know him or at least are very familiar with this company and its size. What would be your advice for an oil company to do, or what would you like to see them do that they`re not doing?
P. CHIDAMBARAM: Well, I`d like them to invest more in production. I`d like
them to charge ...
CHARLIE ROSE: Building refineries, or?
P. CHIDAMBARAM: No, in exploration.
CHARLIE ROSE: Exploration.
P. CHIDAMBARAM: Exploration.
CHARLIE ROSE: Finding new ways through new scientific technology .
P. CHIDAMBARAM: Yes, yes, yes.
CHARLIE ROSE: . to find new oil and increase the supply.
P. CHIDAMBARAM: Right. The south (ph) of Brazil is able to strike oil at much
greater depths than the U.S. can today or U.S. will today. Brazil can tap oil, I`m told, at much greater depths and quite efficiently. Therefore, they have to invest more in producing more oil, and they must price that oil at a level where the company is profitable. Now, just because you`re a cartel and just because you have the opportunity, can you price oil outrageously? This is simply exploitation of a situation.
CHARLIE ROSE: China. In which CNOOC is 70, 80 percent owned by the
government. It is going around the world, Venezuela, India, Central Europe, sewing up oil contracts for their future supply. Is India doing the same thing?
P. CHIDAMBARAM: Yes. We have stakes or we have acreages in half of a
dozen countries. We are buying into equity of some companies, which have
acreages in some other countries.
CHARLIE ROSE: Let me look at this from the outside of India -- many, many,
many people have written this idea that we saw a shift in the beginning of the -- from perhaps in the beginning of the 1900s of power from Europe to the United States. We are now clearly witnessing a shift of power from the United States to Asia. Tell me how you see that and what are the implications for the United States?
P. CHIDAMBARAM: Well, I don`t think there`s a shift of power from the U.S. to
Asia. If you`re talking about economic strength, I think the U.S. is still the world`s leading economy, the world`s most powerful economy. Europe, if you take it as a collective, is more or less equally powerful economy, in terms of GDP.
CHARLIE ROSE: They don`t - they don`t act as a collective, though.
P. CHIDAMBARAM: Yes, they don`t. Japan, even as a stand-alone nation, has a very powerful economy.
CHARLIE ROSE: It used to be 75 percent of the Asian economy.
P. CHIDAMBARAM: Yes, that`s before China and India opened up. What is
happening now is that two more powerhouses are emerging. One clearly has
emerged -- China -- one is emerging. India. And that`s good. That`s good that if you look at the population of U.S., Europe as a whole, Japan, China and India, it`s good that four parts out of seven of the world`s population is on the path of reform and progress and prosperity. Is it good to have China and India among the poorer countries? Or is it good to have China and India among the more prosperous countries?
CHARLIE ROSE: The more prosperous.
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: Clearly.
P. CHIDAMBARAM: I think it`s good for the world. So what`s happening is other centers of economic growth are emerging. Others will emerge. Brazil will emerge as a center. South Africa has the potential to emerge as another center of economic growth. But because of China and India`s population, their impact will be much greater.
CHARLIE ROSE: And the population has to do with its demand potential, its .
P. CHIDAMBARAM: The population ...
CHARLIE ROSE: It is a market for so much.
P. CHIDAMBARAM: Yes it`s a huge market. It will consume more and produce
more. It will produce greater wealth. Imagine in 20 years from today, we will have a workforce whose size will be about 800 million.
CHARLIE ROSE: It is .
P. CHIDAMBARAM: If 800 million people are educated, good health, and are
producing, imagine what they can produce.
CHARLIE ROSE: Do you have any fear that it is inevitable that come -- with
China, for example, with the growth of its economic power will come geopolitical and military ambitions beyond Taiwan?
P. CHIDAMBARAM: I cannot speak for China.
CHARLIE ROSE: But you`re obviously....
P. CHIDAMBARAM: India .
CHARLIE ROSE: Go ahead.
P. CHIDAMBARAM: India has no such ambitions. But even in China, I think
things are changing. To the best of my knowledge, the Chinese leadership is entirely focused on economic growth. For the next 20, 30 years, I do not think the Chinese will be adventurous, if that`s what you mean.
CHARLIE ROSE: Do you expect that in China that they will - that the political
system will become more democratic?
P. CHIDAMBARAM: It will.
CHARLIE ROSE: Inevitably.
P. CHIDAMBARAM: It will inevitably, because an open society follows an open
economy.
CHARLIE ROSE: That`s the rule of history.
P. CHIDAMBARAM: Well, that`s the lessons from history. If after opening up
your economy you try to keep a closed society, something will have to give up, give.
CHARLIE ROSE: How is the bilateral relationship with the United States today?
P. CHIDAMBARAM: Very good. Never been better.
CHARLIE ROSE: Never better. For the United States and for companies and
countries or companies around the world that want to come to India, this is too
simple a distinction, but some say that China is a manufacturing economy and India is a different kind of economy. It`s not quite service, but it`s a different kind of economy. How would you make a distinction between the Chinese economy and the
Indian economy?
P. CHIDAMBARAM: See, the Chinese economy is driven by foreign investment.It`s driven by exports. The Indian economy, the demand is driven by the domestic market. Exports play a marginal role. Therefore, in terms of foreign companies doingbusiness and making profits, you ask any foreign company or any collection of foreign companies, they`ll tell you India is a better bet. A study indicated that 78 percent of foreign companies in India have made profits regularly over a long period of time. It`s a very different number for China.
CHARLIE ROSE: Many people in the United States hear the word outsourcing.
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: And it says to them American jobs going to India.
P. CHIDAMBARAM: It`s a very simplistic way of looking at it. American jobs are not going to India. Work is being outsourced. The alternative is to import people to do that work here, to allow massive immigration into the United States. The point is through outsourcing, you are keeping your costs low. The final product to the consumer is much lower. If you did not outsource, what is the alternative? You would have to stop producing those goods and services, or you would have to import those goods and services, or you would have to allow people to immigrate into the United States to make those goods and services.
In a world where there is division of labor, work will go to places where it can be
done more efficiently and at the lowest cost.
CHARLIE ROSE: So India will be outsourcing too.
P. CHIDAMBARAM: India is outsourcing.
CHARLIE ROSE: To?
P. CHIDAMBARAM: To the United States.
CHARLIE ROSE: What are we doing, for example?
P. CHIDAMBARAM: You are doing our research. You are doing development of products. You are doing design. You are doing patenting our - of - of -- all that. For every job outsourced to India, the Indian economy is outsourcing two or three jobs to the United States. As Indians become more ...
CHARLIE ROSE: Is that because of our skill?
P. CHIDAMBARAM: Yes, it`s because of your .
CHARLIE ROSE: Not - not -- it`s not cost. It`s skill.
P. CHIDAMBARAM: Skill and cost are - are not two sides of the same coin.
They`re related.
CHARLIE ROSE: Right.
P. CHIDAMBARAM: Our costs in some areas are lower because our skills there are better. If India becomes more prosperous, and instead of sending one tourist to the United States, we send two, how many jobs does it create in the United States? You know, instead of sending 100,000 students to the U.S., we send 200,000 students, how much more money is sent to the United States? We send -- if we import technology for, say, $1 billion, and then we import it for $2 billion, how many jobs does this create? So, I think a growing India, a more prosperous India outsources more jobs to the United States, in a way of speaking, in a manner of speaking, than the U.S. outsources to India.
CHARLIE ROSE: Everything you have just said to me is that the rise of India and China and - and other parts of Asia, South Korea has got a bombing economy .
P. CHIDAMBARAM: Yes, yes.
CHARLIE ROSE: . as well. And a higher broadband penetration than India by far and, you know. Here`s a stunning number. This is such an exciting story for me. Tell me the level of - of cell phones increase from 2000 -- you have it right there, I`ll bet -- from 2004 to 2005 and the expectation from 2005 to 2006. Do you have that number?
P. CHIDAMBARAM: I think I have that number somewhere here.
CHARLIE ROSE: OK, but it`s just phenomenal. It`s millions.
P. CHIDAMBARAM: It is. It is.
CHARLIE ROSE: Like 100 million.
P. CHIDAMBARAM: It is growing at 50 percent a year.
CHARLIE ROSE: The cell phones?
P. CHIDAMBARAM: The cell phones alone are growing at 50 percent a year.
CHARLIE ROSE: Fifty percent a year?
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: So, if you had 100 million using it last year, you have 150 this year.
P. CHIDAMBARAM: The goal I think is next two years to have 250 million
telephone users.
CHARLIE ROSE: Yes.
P. CHIDAMBARAM: One for every four. The density of telephones today is about nine or 10 per 1,000. It was 4.5 per 1,000 five years ago. The goal is to make it 45 per 1,000.
CHARLIE ROSE: Having said that, you are also arguing, I think in this
conversation, there is no - this is not a zero-sum game for the United States.
Whatever happens good to India does not come at the expense of the United States.
P. CHIDAMBARAM: It does not. In fact ...
CHARLIE ROSE: Any exceptions to that?
P. CHIDAMBARAM: It is to the advantage of the United States to have a fast-
growing economy in India. If you want to know the number of telephone users,
telephone connections.
CHARLIE ROSE: Cell phones, you have it right there.
P. CHIDAMBARAM: I have it here. Last year, we added 7 million telephone
connections and 15 million cell phone connections. And we hope to do better this
year.
CHARLIE ROSE: Is there anything else growing that fast? I mean, was it --
would it be the penetration of personal computers be the same?
P. CHIDAMBARAM: No. Computers won`t be as many as cell phones.
CHARLIE ROSE: Because the whole world is moving to cell phone anyway.
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: Because with cell phone .
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: . you can do a lot of the things that you did...
P. CHIDAMBARAM: In terms of comparable numbers, what we are doing in
roads, just again, a mind-boggling number. What we are doing in power; adding
10,000 megawatts of power is an equally mind boggling number, in terms of
comparable numbers. And exports are growing at 21 percent, imports at 33 percent.
CHARLIE ROSE: Yes.
P. CHIDAMBARAM: Bank credit is growing at 33 percent.
CHARLIE ROSE: Amazing.
P. CHIDAMBARAM: It is. It is an amazing story. All I ask is that Americans
should be a part of that amazing story called India.
CHARLIE ROSE: By coming to India and - and buying your goods and selling
their products?
P. CHIDAMBARAM: Coming and investing in India.
CHARLIE ROSE: Investing meaning what? Building things?
P. CHIDAMBARAM: No, investing in manufacturing. Investing in services.
Investing in infrastructure. Exporting your goods to India, your services to India,
importing India`s goods. Two-way trade has to increase. Investments have to
increase. You are the second largest investor.
CHARLIE ROSE: Who is first?
P. CHIDAMBARAM: The first comes through island called Mauritius. You are of
course our single largest trading partner. But China is catching up. India .
CHARLIE ROSE: China is now second.
P. CHIDAMBARAM: India-China trade will be equal to India-U.S. trade in the
next two or three years.
CHARLIE ROSE: And then China will - India trade will surpass U.S.- India.
P. CHIDAMBARAM: Not necessarily. If - if U.S. trade grows at a faster rate, U.S.will remain India`s largest trading partner.
CHARLIE ROSE: India has one of the largest Muslim populations in the world.
Or not?
P. CHIDAMBARAM: Second largest.
CHARLIE ROSE: Second largest to Indonesia.
P. CHIDAMBARAM: Yes, I think so. Maybe .
CHARLIE ROSE: No -- well, second or third doesn`t matter.
P. CHIDAMBARAM: Second or third.
CHARLIE ROSE: How is it that the Hindu population and the Muslim population
seem to get along just fine in India for the most part?
P. CHIDAMBARAM: They have got along fine for centuries. They will continue tolive together, work together. It`s only when some misguided elements from outside misdirect them.
CHARLIE ROSE: Like al Qaeda elements?
P. CHIDAMBARAM: Well, it could be infiltrators, and at the same time that could also be triggered by inflammatory and incendiary speeches and writings by some right-wing fundamentalists, Hindu fundamentalists. If the fundamentalists of both the Hindu religion and Islam keep away, people of India -- Hindus, Muslims, Christians, Sikhs -- have always lived together peacefully and can live together peacefully in the future. In fact, in terms of cultural practices, habits, ways of living, food, language, dress, there`s a great degree of commonality within the state among Hindus and Muslims in the state. For example, if you take Tamil Nadu, there`s a great degree of commonality between Hindus and Muslims in Tamil Nadu. Likewise, among Hindus and Muslims in Uttar Pradesh. Likewise among Hindus and Muslims in West Bengal.
The common features tend to be forgotten when we talk about the religious
differences, and these religious differences mean nothing. People celebrate festivals together. It`s only when there are incendiary, inflammatory speeches, writings, agent provocateurs that communal clashes are triggered.
CHARLIE ROSE: The importance of science to India and the percentage of
young Indians who are going into science and science-related fields is on the up?
P. CHIDAMBARAM: Very much. We send hundreds of scientists and
technologists to the rest of the world every year.
CHARLIE ROSE: Educated in India or to get an education outside of India and
come back?
P. CHIDAMBARAM: No, they`re educated in India. They sometimes acquire a
higher degree abroad, but whether they`re educated is in India, or whether their education is complete in the U.S. or any other country, many of them find
opportunities to live and work abroad, because of the facilities of laboratory and
research facilities. We don`t grudge that. We accept that. But the number of scientists in India is very large. I sometimes say lightheartedly, our human resources are so large that we can spare some for you.
CHARLIE ROSE: We need all that we can get, I can assure you of that.
Global health. Everybody in the global health community worries about the
spread of HIV.
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: AIDS/HIV virus. Bill Gates, for one example.
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: . and the Gates -- the Melinda and Bill Gates Foundation has
made significant contributions in India.
P. CHIDAMBARAM: Yes.
CHARLIE ROSE: Tell me how that struggle goes.
P. CHIDAMBARAM: Until sometime ago, we were in the denial mode. In fact, the previous administration, one or two key ministers were denying that we had a threat from AIDS. Our government no longer denies the threat of AIDS. We accept the fact that if unchecked and if unchallenged, AIDS will become an epidemic in India. We are not in a denial mode anymore.
CHARLIE ROSE: So what do you do now that you`re not in a denial mode?
P. CHIDAMBARAM: We have a national AIDS control organization. There is
much greater transparency about discussing AIDS. There is a great deal of voluntary effort. Public health expenditure in AIDS has been increased. And we are beginning to get the numbers which indicate that maybe the numbers are contained that could - - could see the beginning of a decline. I`m saying this very guardedly. We could be just on that point, where the numbers are beginning to decline, thanks to the open, candid approach to dealing with this threat.
CHARLIE ROSE: And so the recommendation of the Indian government, for
whatever benefit its own experience is, to other governments on the subcontinent, recognize the threat and do something.
P. CHIDAMBARAM: Yes. And deal with it openly. Talk about it. Write about it.
CHARLIE ROSE: Because it has cultural implications in terms of denial.
P. CHIDAMBARAM: Yes. I think denial -- denial is the worst reaction that a
government can have to AIDS.
CHARLIE ROSE: Or a person, or an individual.
P. CHIDAMBARAM: It`s one disease that is intimately connected with human
behavior, and human sexual behavior. Therefore, one cannot deny that it exists. And the use of condoms must be spoken about openly. We must make available
antiretroviral drugs at a lower cost. We must establish special hospitals or reserve special beds for AIDS patients. We must recognize that an AIDS patient is not untouchable. That he -- that AIDS is transmitted only in one manner, through sexual contact. And I think talking about it openly and dealing with it openly makes more people seek medical help, and makes more people careful in their sexual activity. I think all that helps to contain AIDS. And that is what we have found in the last year-and-a-half when we have openly confronted AIDS.
CHARLIE ROSE: The image of the United States in India. You said the bilateral
relationship has never been better. And so that means that whatever Indians might disagree or agree with the American foreign policy, it`s not in any way a factor in the bilateral relationship between the two countries.
P. CHIDAMBARAM: There`s no other country with which India is engaged more intimately than the United States. Ask a student where he would like to go. He will say U.S.
CHARLIE ROSE: Why does he say that?
P. CHIDAMBARAM: Because he knows that the best universities are here. The
best education can be obtained here. There`s greater value for a degree from
Harvard or Stanford or Yale or Columbia or Wharton. Ask a scientist where he would like to go and work, he would choose a U.S. university or a U.S. laboratory. Ask a software engineer where he would like to work; he would say Silicon Valley.The point is, there are so many Indians here already, the number will only grow.The engagement between India and the U.S. can never be snapped, whatever be the administration in the U.S. or India.
CHARLIE ROSE: Because there`s been so much cross-fertilization in terms of
education.
P. CHIDAMBARAM: (INAUDIBLE) two million Indians in the U.S., and their
numbers are growing. Virtually everyone in India can claim to have a relative in the United States today. These two countries are engaging each other in ways that is not noticed in the government quarters. And that is a fact.Look at the language that binds us: English. Music. Film. There`s a competition between Hollywood and Bollywood. We make as many films as you do, maybe more.
I think it`s wishful to think that the U.S. and India can drift apart simply because
there are some differences on foreign policy. That`s why, as I said, the people are engaged with each other, and the governments of today have been able to establisha very high degree of cordiality and close relationship.
CHARLIE ROSE: Do you expect the United States might support your effort to
have a seat on the Security Council?
P. CHIDAMBARAM: It should. If the average American sits back and reflects for a few minutes, he will recognize that it is foolish to keep out of the United Nations Security Council a country that represents one- seventh of humanity. The only relevant question is.
CHARLIE ROSE: One out of every seven people on this planet is an India?
P. CHIDAMBARAM: Yes, is an Indian. The only relevant question is recognizing India`s size and population, has India done anything to disentitle itself to a seat in the UNSC?
CHARLIE ROSE: Your answer?
P. CHIDAMBARAM: Answer is no. We are a responsible player. We have
discharged every obligation to the United Nations. We have been a peace- keeping -- we have sent our forces to keep the peace in many parts of the world -- Vietnam, Korea, Congo, wherever the United Nations have asked us to go.
CHARLIE ROSE: Iraq.
P. CHIDAMBARAM: Iraq, no. We didn`t send it to Iraq because we disagreed
with that policy. And we have never started a war. We don`t proliferate a nuclear technology. We are a responsible nation. We are a democracy. What else do you want? We are entitled by our size, by our population, by our location in Asia. Are we disentitled is the question? And if we are not, then why should we not have a place in the UNSC? U.K., Germany, Japan, France, Russia support India`s case. The only two major countries with reservations are the U.S. and China. China for obvious reasons, but they`ll come around. The U.S. must show leadership on this behalf and must actively support India`s claim to a seat on the UNSC.
CHARLIE ROSE: On that note, thank you for joining us.
P. CHIDAMBARAM: Thank you very much.
CHARLIE ROSE: Pleasure to have you here. Thank you.
P. CHIDAMBARAM: This was a wonderful conversation.
CHARLIE ROSE: Thank you. Thank you. Finance minister of India, a place that the world is looking at with increasing curiosity as the world changes, and India is such a central part of the change that is taking place.
Thank you for joining us. See you next time.
