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Emphasising
India’s pivotal role in the South Asian region, the Prime Minister, Dr.
Manmohan Singh, has said that the ‘time has come for a new vision, a new
commitment and a new sense of purpose in South Asia.’ Addressing a function to
mark the dedication of Haksar Memorial Conference at Centre for Research in
Rural and Industrial Development, in Chandigarh today, Dr. Singh said, ‘we must
work with our neighbours to ensure that all nations benefit from the growth
process in the region’.
Referring to South Asian Free Trade Area
(SAFTA), the Prime Minister said that SAFTA is only the first step in the
evolution of SAARC as a regional trade bloc and an economic union, “to exploit
its full potential we need to complete the process of SAFTA expeditiously,
complement it by a SAARC Investment Area and move on to deepen it further by
forming a SAARC Customs Union and then gradually to an economic union.”
The
Prime Minister also said that SAARC could evolve a forum for annual meetings of
economic or industrial ministries to facilitate discussion on exploitation of
complementarities in their economies for mutual advantage. He also emphasised a need to evolve a common
SAARC Transport Policy and promoting regional co-operation in the area of
energy.
Remembering
the contribution of Shri P.N. Haksar, the Prime Minister said, “he was a
remarkable civil servant and diplomat who had a deep understanding of the world
as well as of our complex polity”.
The
following is the text of the Prime Minister’s speech on the occasion:
“I am happy to be
here today for more than one reason. I have fond memories of my association
with the Centre for Research in Rural and Industrial Development and my
association with each one of you. I am proud of the good work being done by
this Centre and compliment Rashpal Malhotraji for the dedication with which he
has built this institution.
I am also very happy to be here
today because this Conference is dedicated to the memory of a very revered and
respected friend of CRRID, and of all of us, the late Shri P N Haksar. CRRID
benefited immensely from his advice and guidance as the first Chairman of its
Board of Governors and his role as Editor of the journal Man and Development.
Your
Conference is discussing a wide range of issues that reflect the many
pre-occupations of Haksarji. He was a remarkable civil servant and diplomat who
had a deep understanding of the world as well as of our complex polity. He was a scholar, statesman and a passionate
believer in the role of science and technology in transforming India. He was,
above all, a truly pan-Indian personality, perhaps one can even say a truly
South Asian personality. His deep understanding of the region enabled him to
reflect on the complex challenges facing South Asia.
I hope CRRID
will devote itself to a comprehensive research project on how we can take
forward the process of development and regional cooperation within South
Asia. The history of the 20th
Century is behind us, and its consequences are with us. We have all come to
live with the reality of the new political, economic and social realities of
South Asia. Positioned as we are,
geographically and economically, India has a pivotal role in the region. This position brings with it both privileges
and responsibilities.
It has often been said that one can choose one’s friends but not one’s
neighbours. That, in itself, is not a satisfactory proposition. One must endeavour
to ensure that our neighbours are also our friends. But, as they say, it takes
two hands to clap. I do sincerely hope that this region shows the wisdom and
foresight required for all of us to work together to reclaim for it the glory
that makes us all proud of our inheritance.
I
have often said that we have, in South Asia, not just shared boundaries and
shared civilisational roots, but also a shared destiny. It is not just our past
that binds us together, but our future too. As the two recent natural disasters
- the tsunami of last year and the recent earthquake - have proved, even nature
has ordained it so.
Given
all these links and inter-connections, I do believe we need to invest more time
and energy in working together to deal with the great challenges of our time.
Be it the challenge of eliminating poverty or the challenge of fighting
terrorism. The fight against poverty and terrorism in South Asia is an
indivisible fight. These are threats to the life, peace and security of all our
peoples and we must deal with them as such. No country can any longer pretend
that some one’s terrorists could be some one else’s freedom fighters. No
government can any longer pretend that what happens across the border is not
going to hurt it internally. Be it poverty, be it disease, be it natural
disasters or be it terrorism, the destiny of South Asia is inter-linked and we
must learn to work together to deal with these challenges.
I hope we can all approach the SAARC
Summit later this week with this perspective in mind, a perspective of
inter-dependency that strengthens our collective security and secures our
collective prosperity. I am aware that we in India will be expected to take the
lead in many areas. This is the privilege and responsibility I referred to
earlier. I do believe that we must work
with our neighbours to ensure that all nations benefit from the growth process
in the region. Our neighbours must see us as a land of opportunity. Be it in
education, in health care, in tourism, in trade and investment opportunities,
India has the capacity and the tradition to be welcoming of its neighbours.
Provided, of course, that those who visit us come as our friends and our well
wishers and bear no ill will towards our people and our Nation.
I am happy that the South Asian Free
Trade Area, SAFTA, is on the anvil. This SAFTA is the first step in the
evolution of SAARC as a regional trade bloc and an economic union. Most of the
discussion on SAFTA centers around its favourable effect on intra-regional
trade. Regional economic integration, however, is more about finding an engine
of growth rather than just for promoting trade. Countries – developed as well
as developing - have looked to regional economic integration as a means of
strengthening their international competitiveness and as an engine of economic
growth in recent years.
Thus, European countries began with
a single Common Market that keeps expanding and has gone as far as to give up
their national currencies. North American countries have formed NAFTA and are
moving ahead with plans for a larger Free Trade Area of Americas (FTAA). Nearer
home in Asia, we have ASEAN that is emerging as an important regional grouping
with the implementation of the ASEAN Free Trade Area (AFTA). In fact, ASEAN
expedited the implementation of AFTA in the wake of the East Asian Crisis of
1997 and have now set before themselves a goal of creating an ASEAN Economic
Community in the coming decades. The ASEAN countries are also getting
integrated with the economies of countries in the neighbourhood, namely, Japan,
Korea and China and also India, through free trade agreements.
The new-found interest in such
regional arrangements is based not just on trade promotion but on exploiting
the potential of efficiency-seeking restructuring of industry on a pan-regional
basis. This would have income and efficiency effects and hence could be
valuable drivers of growth. The
experience of European Union suggests that the formation of the single European
market led to a substantial restructuring of industry on a pan-European basis
and hence enabled it to exploit economies of scale, scope and specialization.
The efficiency-seeking restructuring unleashed by the process of economic
integration has helped in convergence of income levels between richer EU
members (e.g. Germany) and poorer ones (Spain, Portugal and Greece).
Given the strong trends towards
economic integration which go far beyond tariff reductions to gradual economic
convergence, any region can ignore the formation of its own scheme of regional
integration only at its peril. By
removing trade policy barriers, SAFTA would lead to an estimated trebling of
intra-regional trade on a conservative estimate. This would make South Asian
internal trade more respectable compared to a marginal 4-5 % share as of now.
By making it possible to trade directly rather than through third countries, it
would also lead to cost savings for the region.
However, we must see SAFTA as the
forerunner of deeper economic integration in the region. The limited experience
with trade liberalization that South Asia has had so far in the framework of
SAPTA or bilateral FTAs, has already had a beneficial impact. The Indo-Sri
Lanka bilateral FTA, for instance, even within a short period of less than
three years of implementation, has led to a lot of dynamism in bilateral trade
and investment flows. Thus an Indian tyre company set up a large export-oriented
tyre plant in Sri Lanka to cater to its growing markets in Pakistan, Middle
East and other countries taking advantage of abundant supply of natural rubber
in the country. UNCTAD’s The World Investment Report 2003 has
highlighted how Sri Lanka attracted Indian investments of US$ 145 million in a
very short period making India the third largest source of investments for the
island. Similarly, the India-Nepal FTA of 1996 spurred many Indian companies to
shift production of common consumer goods for the north-Indian market to Nepal.
As a result, these items emerged as some of the most important items of Nepal’s
exports to India.
The other lesson that comes out of
recent experiences of regional economic integration in South Asia, as
elsewhere, is that the smaller and poorer countries benefit more from RTAs as
their trade becomes more balanced. An
example is the India-Sri Lanka FTA which has benefited Sri Lanka. This success
has prompted Sri Lanka to seek to expand the scope of the India-Sri Lanka FTA
to cover investments and services in a comprehensive economic partnership
agreement.
Regional economic integration will
also make member countries especially the smaller ones more attractive
destinations for third country investments by obviating the constraint imposed
by a small domestic market. Studies have shown that the opportunity cost of
non-cooperation for South Asian countries has been substantial. Regional
economic integration in South Asia could generate billions of dollars of new
income, employment, trade and could help the region in its fight against
poverty.
Thus, SAFTA may help in evolving a
horizontal specialization across the region to enable the most optimal
utilization of the synergies between member countries for their mutual
advantage. SAFTA is a step in the right
direction. However, to exploit its full potential we need to complete the
process of SAFTA expeditiously, complement it by a SAARC Investment Area and
move on to deepen it further by forming a SAARC Customs Union and then gradually
to an economic union.
SAARC could also evolve a forum for
annual meetings of economic or industry ministers to facilitate discussion on
exploitation of complementarities in their economies for mutual advantage.
SAARC should also take steps to improve
physical connectivity by road, railways, inland waterways and shipping and air
links to exploit the advantages of geographical proximity. They could evolve a
common SAARC Transport Policy to facilitate movement of goods across the
region.
Energy co-operation presents immense
potential. To promote regional
co-operation in the area of energy a South Asian Energy Dialogue comprising
experts, academics, environmentalists, bureaucrats and NGOs could examine the potential for energy
co-operation and suggest measures to exploit this potential. These are just
some of the ideas that are worth pursuing. There are many more, especially in
the sphere of education, health care, tourism and disaster management.
Institutes like yours must do the
required research to work out the costs and benefits of such projects and
programmes so that policy makers can take more informed decisions. More
importantly, your professional research can help create the required public
opinion, and convince skeptics, so that Governments are better empowered in
pursuing new initiatives.
The time has come for a
new vision, a new commitment and a new sense of purpose in South Asia and I
hope we have the political will and wisdom to seize the moment. I hope your
conference will discuss some of these issues freely and frankly, bringing
professional opinion to bear on the deliberations”.
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YSR/DS/HK/SKS
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‘Time for a New Vision, New Commitment in South Asia’: PM
