Special Lectures on Development


I visited UNESCO in Paris which has been advocating the idea of special courses and departments on Development for a number of years. I went there with the purpose of trying to find other institutions in the world that had pioneered in the field of Development Studies, particularly integrated courses in Development Studies like the one we have here, so that we could learn more about them, with the hope that this course could benefit from the work that had been done in other countries. When I met the gentleman in charge of their Development Studies program at UNESCO and I explained to him about the significant beginning that has been made at Annamalai University and the purpose of my visit, he listened to me very carefully and he said, "Mr. Jacobs, as far as I know, Annamalai University is the first university in the world to introduce such a course. You have come here to learn from us, but I think quite the contrary, that UNESCO, and other countries that are trying to work in this field, perhaps have a lot to learn from the work being done at Annamalai University". For participating in this pioneering effort, I want to thank all of you who have joined the course. How important this course is and what it will lead to in the future I hope to make clear over the next one and a half days. But for that to become a concrete reality, we have to wait for some more time. This is a pioneering effort, an effort which I hope to be able to explain the significance of, the value of the program, and how we hope that you can benefit by it, and the country can benefit by it.

Indian Independence

I'd like to go back to a time when most people in India did not believe that India would ever be free. If you go to the average village and listen to the conversation in the households; if you go to any big city and listen to what is being spoken in the offices; if you come to the Universities and hear what is being spoken in the classrooms, you'll see the common theme at this time I am talking about was, India will never be free. And if it did become free, what would India do? After so many decades of British rule, would the country be better off? That was one of the serious questions raised at that time. Perhaps many of you think I am speaking about a period 100 years ago at the time the Indian National Congress was first established. Or may be around 1916 when Mahatma Gandhi returned from South Africa to take up the freedom struggle. Or may be some of you think I am talking about 1930, when Indian freedom became the express goal of the Indian freedom movement. But I'm not talking about any of those times. I am talking about 1946. One and a half years before Independence, 9 months before Nehru was asked to form the first provisional cabinet, the vast majority of people in the country including educated people, really did not believe that India would be free. Those that did, even among them, there were very serious doubts as to what the outcome of that freedom would be if it was achieved. This may sound very strange, but if you look around the world at all great events, you'll see this seems to fall into a pattern. In 1903 physicists in Europe and the United States were standing in front of blackboards like this and giving long mathematical equations to prove beyond a shadow of a doubt that manned flight was perfectly impossible. While they were delivering their lectures, the Wright Brothers in Kitty Hawk were flying in the first airplane. It wasn't only in the universities and it wasn't only before the fact that people doubted. You can read in Encyclopedia Britannica that for 5 years after the Wright brothers flew in the first airplane, the people in the U.S. did not believe that man's flight was possible. Actually when the Wright brothers sent notice to the newspapers that they were planning to demonstrate their flying at Kitty Hawk, not one newspaper journalist came to see because they thought the idea was perfectly preposterous. It took 5 years to convince people that they were actually flying. If that's the case, then it won't be so surprising to understand that the idea of Indian freedom wasn't an idea that could spread very easily. In fact, the very idea that India should be free was only enunciated the first time publicly in 1904 by Sri Aurobindo in a Bengali journal. Until that time the political leaders of the day, even those educated in Britain, had held up as the goal of the movement only Indian participation in the British government in India. Even when Mahatma Gandhi returned to India in 1916, his express goal was only to get Indian participation in the British government.

It was not until 1930 that the Indian National Congress adopted the program of absolute and total independence from the British as the goal of the movement. Why did it take so long, and why even 15 years after independence had become the express goal of the leaders, did so few people really believe it was possible? That is the nature of all new and great accomplishments in the world - whether it's flying or independence.

It's not only the Indian people who didn't believe, but surely the British did not believe either. What was it then that made independence possible? The very first thing necessary was that people must come to believe that it's possible. After that, they must come to believe that it is desirable. It sounds easy, but if you read all the memoirs of the freedom leaders, you will know how hard they had to struggle and against what odds, to put forth this very simple and apparently self-evident idea. It is self-evident to all of you today who were born after Independence, but it was not so apparent to your grandparents.

Putting forth this idea was not enough. Once this idea was accepted, it's not an idea which can overcome the largest imperial bureaucracy and most powerful nation in the world. It required an enormous strength. That strength came from the people. The same people, who had resigned themselves to perpetual rule under the British at the turn of the century, took the decision that they want to be free. That decision released enormous energy, enthusiasm. It was built up not in a day, a week, or a few years, but over decades by dedicated leaders who continuously projected this idea and goal before the people. In the first decades the idea fell flat; even when the idea was accepted, the hope was not there. Even when the hope was accepted, the organized massive will and effort required took many years to develop. Finally, that will, expressing through the National Congress, developed and guided by idealistic leaders who had gained an experience and skill in dealing with the British on their own terms, finally led to the great day which shocked the world. It was the beginning of the end for colonialism all over the world.

The whole thing started with an idea. That idea is still spreading and still alive in the minds and hearts of many people all over the world today, who don't enjoy the freedom that India achieved in 1947. That is the power of an idea.

Indian Prosperity

In 1981 I was at the Planning Commission in New Delhi. I was meeting one of the advisors to the Planning Commission, a distinguished man who had formerly worked with World Bank and had been specifically called back to India to help in planning for Indian prosperity. At that time the gentleman explained to me that he had been given a specific assignment by the Planning Commission to draw up a program and project where India will be 50 years from now. In the confines of his private office, with not witnesses, he turned to me, feeling that he was confiding in someone who shared all his skepticism and said, "Frankly, let's admit it, not in 50 years, not even in a 150 years can India ever be prosperous". It was very clear to me that for this gentleman the idea of prosperity for India was as fantastic in India as the idea of flight was to the American people even 3 years after it occurred. It's not so easy to accept a new idea.

It's not just Indians who have trouble accepting new ideas. In 1963 the FAO sent a team to study the food production in India. I met with one of the members of the original team in 1963, and the confidential report that they prepared and submitted at that time was that between 1963 and 1970 total food grain production in India would increase by a maximum of 10%. The gentleman said with a great deal of satisfaction, "Fortunately, we were wrong". They were incredibly and unbelievably wrong, because between 1965 and 1970 alone it increased by 50%, 5 times the projections of international experts.

In 1960 the World Bank did a study of all developing countries and projected that no developing country would have a growth rate of more than 3%. Most of those countries, they said, would not be able to achieve even 2 or 2½%. The World Bank looked back somewhat gratefully to find out they were wrong. Between 1960 and 1980 the majority of developing nations grew by more than 3%. India's growth rate was around 3½%.

The problem comes, whether we are talking about airplanes or freedom or food production or prosperity, because we want to judge the future based on past performance. If we are going to judge the future intelligently and if we are not going to prove as beside the point as the physicists in 1903, we have to understand that the laws by which countries grow and humanity develops are not limited by past performance. Otherwise we would never have the phenomenal successes we have in the world today. Every new idea looks unbelievable before it is achieved. When Gandhi was asked how he was going to get the British to leave India, he said, "I'm going to ask them to leave and they're going to go". The whole world laughed and those who laughed loudest were the British. The day that the Congress declared a nationwide strike and the whole country came to a halt, the entire British bureaucracy began to tremble, and their days were numbered.

Now let's come forward a little in time. In 1969 the government nationalized the banks of India. At that time the total deposits in the nationalized banks was 6000 crores. One of the directives given by the bank at that time was to go out and develop the rural areas. The banks were not only reluctant to go and develop the rural areas, they were horrified at the prospect. One chairman of a nationalized bank said at the time, "we are a commercial bank, and we are here for trading and industry. If we go to the rural areas we will be bankrupt". The astonishing fact was that 13 years later, the nationalized banks had collected more than 20,000 crores of deposits from the rural areas, an amount equal to more than 3 times their total deposits at the time of nationalization. The banks who thought that opening up rural branches would be the easiest way to go bankrupt, never felt that opening branches would lead to collection of enormous deposits. There was 20,000 crores of potential deposits sitting in rural India and nobody knew it existed. How many of you know what the nationalized deposits are today? 84,000 crores. There has been a 14-fold increase in the deposits in 16 years. That was the potential that we couldn't see. It wasn't even a potential: that wealth existed, but we didn't know it. Untold wealth and potential in all areas exists in India today that is as concrete, real and tangible as those potential bank deposits were which we didn't know existed in 1969. For India to develop, we have to tap those potentials.

Where was Japan in 1950? Could any of your parents imagine where Japan would be 36 years later? Would anybody have said that the U.S. which had just conquered Japan in the war, occupied them, installed American institutions, would be constantly preoccupied by fear that Japan was going to become the most powerful industrial nation in the world? Where was Taiwan or Singapore in 1965? I remember in the 50's, if a product had ‘Made in Japan' on it, we would not buy it in the U.S. because that meant it was of the cheapest quality. Today American industry is finding it difficult to compete with the quality that is coming from any of the Asian countries.

Professor Gomatinayagam mentioned the work that we did together on Development Indicators. When Dr. Bhaskaran and I and several others colleagues here in the university first went into a village in 1981, Thadagam in Gingee Taluk, the first thing we did was ask the villagers how much they had progressed in the last 20 years. We had a survey done by the Census Organisation in 1961 for the sake of comparison, but we were immediately disheartened when they told us that nothing had improved in the last 20 years. They said they were worse off than before. I remember that sinking feeling of discouragement that a researcher can feel when he knows at the beginning that his experiment is going to fail. We had come there to measure development but they told us there had been no development. Yet we found that in every sector of their life there had been a substantial improvement in the standard of living. There had been only 1 cycle in 1961, now there were 60. There were no radios in 1961, now there were 38. There were only 5 people with wrist watches, now there were 50. 25% of the families were not taking 3 meals a day in 1961, but by 1981 they were all taking 3 meals a day. The number of families living in either tile-roof houses or Madras terraced houses increased from 47 to 93, literally doubling. They had a new road, a new school; they had electrification for their houses and their pump sets. Yet the people honestly felt they had not developed. If this is how people can feel when there has been so much improvement, if they could be so unconscious of the development that had taken place, we drew the conclusion that it's possible for a whole nation to be unconscious of its progress. For that reason Annamalai University and our Society joined together to work on the Development Indicator project. For the same reason the project received a good deal of attention from the Central Planning Commission. They drew up a directive that development indicators must be introduced all over the country over the next five years.

It is possible for people to feel, when everything is better, that they are worse off than before. It is possible, when a country is destined to be a leader, like Japan, for them to feel that they will never catch up with the leaders. It is possible for a nation with the extraordinary talent and cultural reserves of India, to come away after colonial rule feeling that somehow they are inferior to the Western nations. All those things are possible, but that doesn't mean that they are true.

It's also possible for us to have a number of other illusions. For example, the illusion that the West is 100 or 200 years ahead. In 1933 the rural town of Tirukoilur had electricity, as did a number of rural towns in Tamil Nadu. In 1933 90% of American farmers were without electricity. Rural electrification was completed in the U.S. only in the early 1950's.

What does it matter if we underrate our capacities. Modesty and humility are great virtues which have been revered in India for millennia. It does matter. First, because when you are not aware of what you have achieved, it is very hard to take serious efforts to achieve something more. How many times you hear people say, ‘I have worked so hard and I've not gotten anywhere so why should I take any more efforts?' Unless we know objectively, scientifically, what the results of 36 years of Indian independence have been, unless we are aware not only of our weaknesses, but of our real accomplishments, how is the nation going to release the energy and enthusiasm for the great effort it has to take in the future? That is one of the purposes of this course.

The second harmful effect of this general negativism is it leads to an attitude of resignation and it generates frustration. You get people like Thadagam villagers saying that even if the politicians come there they won't listen to them because all their promises are false and they never do anything for them. Frustration gradually builds up and turns into violence.

Where are the trouble spots today in India? The most troublesome spot today is in the Northwest. The Punjab is the most developed area of the country. Who are the most organized and outspoken unions in the country? It's not the agricultural labourer who has gotten relatively little. It's the bank employees, the life insurance employees, etc. It's those who are at the top of the scale. Even those who have achieved so much come to have a feeling of frustration when this negative attitude is here. You can see that people who complain the most are very often the most prosperous and those who have benefited most by the government's policies.

I said the most important thing is objectivity. It's very hard to be objective about this. We can refer the case to somewhat disinterested parties and see what they have to say. A few years ago, Sir John Thompson, the British High Commissioner to the United Nations, said, "India is a strikingly successful developing country, more successful than not only most people outside India believe, but than most Indians believe also". The European Management Forum in Switzerland said of India, "It has made tremendous economic progress since Independence. India is perhaps the only developing country to have built up comfortable foreign exchange reserves".

Over the last one year while I was traveling abroad, I had an opportunity to speak with more than a half-dozen of the largest banks in the United States to discuss further investment in India. I wanted to know what the attitude of those banks was concerning investment in India. I can sum it up very briefly: there was unanimous agreement that among all the developing countries, almost all of them had proved to be very bad credit risks and the banks were overextended. India was one of the very few countries in the world which had managed its resources and development efforts so well that its rating among international banks was continually increasing. American banks are looking today to invest much more in India than ever before. From their point of view, it's one of the best places to invest. One of the banks told me that at recent meetings in South Korea of the World Bank and International Monetary Fund, the representatives of commercial banks in Europe and the U.S. were pleading with the Indian government to allow them to give more money: ‘Please allow us to invest more money'. The Indian government said they would consider it.

The West German government recently said, "To treat India as a mere developing country is a big mistake. Today it is a great industrial power". I can go on and on, telling what World Bank has said, what international organizations have said. Ten years ago if you traveled anywhere in the world and said that you had a project in India, there would be a look of discouragement. Today you can go anywhere in the world saying you have a project for India and there is all admiration and appreciation. I don't think it's only on the basis of an individual achievement that Dr. I.G. Patel, former Reserve Bank Governor and Director of the Indian Institute of Management at Ahmedabad, has been appointed as the Director of the London School of Economics just about a year and a half ago. That is one of the most distinguished institutions in the Western world, and it's the first time that someone of Asian origin has been posted as the Head. It not only reflects his individual extraordinary career, but it reflects the incredible change in the attitude of the Western world towards India and its potentials.

We can take some of the facts. Between 1950-80 food grain production in India increased by 2½ times. Power generation increased 10 times; steel production 7-fold; paper production, 9-fold; coal, 3-fold; doctors, 3-fold; the length of the roads, at an extraordinary cost, 3-fold; the number of telephones which was only 160,000 in 1950, by 1980 was over 2 million, and it's much more than that today; the number of hospital beds tripled; primary school enrollment increased almost 2½ times; the enrollment in all school and colleges increase almost 4 times; per capita food consumption increased 25%; cloth consumption, 163%.

There are many details we can go into but that is not my purpose now. However I will mention a few, because one of the common negativisms we hear today is, "It's all fine, rich people are undoubtedly richer, we know that, but the poor people haven't been benefited". Just a few facts: before Independence the starting wage of a last-grade government servant was Rs.5/- per month. Today it is 280/- per month. Before Independence his boss started on Rs.100/-, and today he gets 700/-. The boss's income has gone up 7-fold, and the last grade man has gone up more than 50-fold. Agricultural labour in the early 1940's earned 25 np per day. Now Rs.7/- is quite common and 15 or 20 rupees is normal in many areas. Even at Rs.7/- it means a 28-fold increase. The farmer who is cultivating the paddy and employing that labour, was selling his paddy for Rs.10/- per bag, and now it is Rs.120/- per bag. It is only a 12-fold increase.

These are very impressive figures, but after all, the government has spent an enormous amount of money. Everyone knows that money has been wasted right and left and we could have done much more with it. If that money has been spent properly, who knows where India could be today? But actually when you work it out, since 1950, in 30 years the average expenditure of the government worked out to 20 paisa per person per day. That is not even enough to buy everybody a cup of tea. How many schools, hospitals, roads, factories, power plants, ports, ships, airplanes, have been produced, how much has been achieved on that 20 np per person per day.

In 1943 in the Bengal famine 3 million lives were lost in one year. We haven't had a famine since then. In 1946 the average life expectancy in India was only 27 years; it is now double that - 54 years. According to one of the calculations we did early in our Development Indicator project in 1981, there were 90 million people alive who would not be alive if it were not for the extraordinary improvement in public health, medical facilities and life expectancy brought about due to the Plan expenditure. 90 million lives is nearly the population of Japan, 1½ times the population of Germany. If any government can save 90 million lives in 30 years, even if they have done nothing else, that is quite an extraordinary achievement.

My theme today is that Indian development, like Indian freedom, has to go through stages. In order to be achieved, the first stage is we have to believe that it is possible. In order for us to believe that it's possible, we have to be aware of the realities of today, and actually of what has been achieved today. That belief in the idea is the first essential thing. But that is not enough.

In order for Indian independence to be achieved, the political leaders not only had to accept the idea, they had to convince the people, release their energy and enthusiasm to achieve that idea. That is not as easy as it sounds. Where were we in 1947 and 1950? The people of India had been under colonial rule from the British for a 150 years and before that for a long time. There was an atmosphere of fear pervading the country, a huge monstrous imperial bureaucracy which dominated and controlled all walks of life including salt production. There was a necessary attitude of submissiveness before an authoritarian government. In most fields, opportunity was closed. New industries were discouraged, especially if they competed with British industry. Education was reserved for a small minority, and that too, with the specific purpose of preparing more people to go into the bureaucracy and run it. India had its own traditional problems also: outmoded traditions like the caste system that hampered its development.

It's very hard for any of you here to appreciate what life was like then. It's very hard for the country itself to appreciate it, since 85% of the Indian population today was born after Independence. To find people who really remember what it was like requires a bit of a research project.

After Independence the leaders of the freedom movement took up a new struggle. Nehru wasn't an economist or planner, he was a political leader. None of the political leaders claimed to have a knowledge of development. They had very few examples to look for. But they felt that once having achieved this basic physical goal of political freedom, the country could not really be free until it was free from poverty and ignorance and its own sense of inferiority as well.

The first thing the leaders did was to introduce a massive program for civil and social rights, to free man of the social inhibitions now that the political inhibitions were gone. The inhibitions on caste, women had to be removed. They supported civil rights through innumerable programs and new laws; they introduced reservations, quotas and land reforms; they introduced hundreds of new programs designed to make real and practical in the life of the people this new idea. When the nation discovered one morning in 1947 that it was free, for the lives of 95% of the people that didn't mean very much. Their lives didn't change because of an announcement in Delhi. To make that freedom real, the freedom leaders launched a movement, took a decision, proposed a preposterous idea: let's catch up with the West. The first step was the idea. The second step was to release the energies of the people to achieve it. It is an idea that even today has not been fully accepted by the Indian people. Having come here originally in 1971 and having traveled back and forth several times in between, I am continuously struck by the enormous changes that are taking place in the country. Sometimes people here wonder which country I am talking about when I speak like this.

In the early 1950's the Tamil Nadu government introduced a program to promote high school education all over the state. They decided that this education was something that people wanted and needed. They opened up more than a 100 new high schools all over the state. Within 5 years most of those high schools were either closed or converted to primary schools. Though the government recognized that higher education was valuable, the people didn't. I don't have to tell you the position today regarding high schools. In every school, from high schools to medical schools to industrial training institutes, education has become an absolute craze in India. I have seen with my own eyes parents coming and begging for entry into a high school, offering 20,000 rupees to get their child into a good high school.

In 1970 there were one or two buses plying between Pondicherry and Cuddalore every hour. Today in either direction you can get on a bus every 3 minutes. In 1960 there were 2 medical shops in Pondicherry. Today by a recent count, there are 47. If you look around everywhere, the signs show tremendous activity. Streets are crowded with cycles, the markets are crowded with people even on Sundays, courts are overflowing with people. However much prosperity has been achieved or not, there is no question that the country has awakened, it is active and energetic in many walks of life. There is a craze for modern hospitals, modern medicines. The country is awakening, the government has succeeded, if nothing else, in releasing enormous energy.

Convincing the people that prosperity is possible is a great thing. As I said, It's not enough. India is privileged today to have a Prime Minister who not only speaks about Indian prosperity and catching up with the West when he goes on political campaigns to the villages, but even when he addresses the U.S. Congress he says in a serious, confident tone that India is going to catch up; in fifty years India is going to catch up with the most prosperous countries in the world. Certainly the idea is catching on. The energy has been released. For that energy and idea to materialize and achieve the results, something more is necessary. The energy has to be channeled into creative, constructive activities. For that several things are necessary. The country needs to get organized, needs many new institutions, requires many new skills and strategies.


I'd like to summarise what I said this morning by telling you a story. This happened to a very good friend of mine. He had a friend who was a teacher in Cuddalore, about 20 years ago. The teacher's father was retired and had fallen ill. He had been in the hospital for about a week and a half when my friend went to visit him. He consulted the doctors who informed him that the old man had been given up as hopeless. All the doctors who had examined his case said he had no more than 2 or 3 days to live. There was no treatment that could help him. He was lying in a half-conscious condition and wouldn't even respond to the calls of his family members. My friend turned to the teacher, the old man's son, and asked, "Do you want to save your father's life?" The teacher replied, "Of course I want to save his life, what kind of a question is that? But there is nothing I can do, it's a hopeless case and the doctors have given up. Anyway, he is past 60 and he has lived a full life so I can't complain, but what kind of son do you think I am that I don't want to save my father?" My friend said, "If you want to save your father's life, you can, just do what I say". They went into the old man's room, and my friend leaned over the man, saying in a loud voice, "Hey, what are you doing lying on the bed; you've got very important work, what about the house you are going to build?" Suddenly this man, lying on the bed as if in coma, began to move; he gradually opened his eyes. My friend repeated, "What about the house, how are you going to build your house if you stay in bed like this?" To the amazement of his son, the old man looked up and said, "What house?" My friend said, "The house that your son is going to give you the money to build, the house you've always wanted your whole life". By this time the old man's eyes were fully opened, he had a bewildered look on his face; he turned to his son, then to my friend, and he said, "What house?" My friend said, "Your dream has always been to build a house and now your son says he will do it!" The old man said, "How is it possible?" My friend said, "Your son is a teacher, he's earning Rs.280/-. He has so many people requesting tuition. If he takes them, he can earn a minimum of Rs.500/- extra per month just from tuitions. Your son tells me he will do that and give you Rs.250/- per month. With that money, in a few years you can build your house". The old man was fully awake, his head was half off the pillow, he didn't know what to believe. He turned to his son and said, "Is it true, will you do it?" The son said, "Yes, I will do it; I don't like tuitions, but for you I will do it". The old man sat up in the bed. He started to plan, to calculate. He said, "If you can give me Rs.250/- I can start collecting things even now". 20 minutes later the old man walked into the doctor's office and said, "I'm leaving". The doctor thought he had seen a ghost. After the old man had checked out, he began dedicating his entire life to fulfilling the dream of building his own house. He collected old window frames, bricks, anything he could find. Within 3 years the house was built. Now the old man is over 80 and he is still alive today.

What brought the man back to life was an idea that could inspire him. When he became inspired, all the energy that seemed to be sapped away from his body, came back. He was immediately restored to health. That is the power of an idea when it sparks our emotions and touches us at a place where we really feel it. That man has accomplished his life-long dream and he is now living to enjoy it.

This is the process of development. The nation needs an idea that will spark its energies and enthusiasm, and make it rise to take the effort necessary to achieve the goal. In the old man's case, the one essential ingredient was the cooperation of his son. His son had the skill as a teacher, but he wasn't putting that skill to use. This is one example of development.

When the leaders of the freedom movement succeeded in sending the British out of India, they decided their job wasn't over. They decided, having created political freedom for the country, it was their duty to give the country social and economic freedom as well: freedom from ignorance, from superstition and poverty. They weren't very experienced in this line, and one thing they found out very quickly was that it is a lot easier to organize a revolution than it is to organize national development. After all, if you are a freedom fighter, in the Indian freedom movement, what the leaders did was to ask the people not to do this or that, to boycott the schools, the British government jobs, the British cloth. It doesn't require any skill not to do something. What the leaders succeeded in doing was inspiring the people with an idea and giving them the courage not to do anything. But once they had freedom, that didn't work anymore. You can't develop a country by asking people not to do this or that. You have to fire the people to start doing many things. For that, one critical thing is necessary, which was not necessary for the freedom movement to succeed, and that is skills. For a country to develop itself, it needs an enormous variety of skills.

If India had had a violent revolution like many other countries, then it would have needed the skills for an army. Even if that had been the course of Indian freedom, there are only a very few skills needed for fighting. But the skills necessary to build a nation are almost infinite: skills in agriculture, industry, education, medical care, law and constitution, ship building, power generation, etc.

What the political leaders found very soon after Independence was that gaining independence was pretty easy. All they had to do was get the people to follow them. But persuading the people to develop and build up the nation was far more difficult.

Many people say, in looking back on the last 36 years, "After all, government hasn't done much". Power generation isn't enough, coal isn't enough, medical school seats aren't enough, and so forth. The question that nobody ever asks is, "Which government has ever done this?" Which government in which country has ever taken over in a position that the Indian leaders confronted in 1947 and has done any better? The United States wasn't developed by its government. I have often said, and many of my fellow Americans will agree with me, that if the United States development had depended on its government, we would be far, far less developed than India is today. The U.S. government has followed only one rule, which is to stay out of almost everything. The government didn't develop the power supply or the energy sources. Even the first mail service was not a government development. It didn't develop the banks, steel mills, shipping companies. Even the great educational institutions were not developed by the government. Harvard, Princeton, MIT and Yale were all founded by private individuals. Even the telephone system in the U.S. was started by private individuals and until this day it is run by private corporations.

Which is the country that has done better than India, that has inherited 150 years of colonial rule, and all the problems and still been able to tackle those problems more successfully? If you are able to think of any country, have they done it in freedom? I'd like to read an interesting quote from the Encyclopedia Britannica: "The Indian experience remains the most impressive attempt to industrialise a developing former colonial country without the expropriation of capitalists and landlords, while conserving the forms of parliamentary government". In other words, India is the most successful attempt in the world to achieve development with a democratic government and a mixed economy. When you think of China, it was never a colonial power as India was, completely dominated. The fact of the matter is, as the government is learning even here, no government has ever developed a country and probably no government ever will. No government can develop a country. The people have to do it. So long as the government thinks they can do it, or so long as the people think the government should do it, it won't be done. Development is something that is done by the people. Government has a role to play, but what is that role? It can go in to new areas where nobody is bold enough to attempt and set an example. It can broadcast new ideas and information. It can do research in areas where no individual or corporation can afford to invest. It can work in areas for the common good where leaving things in private hands may not be in the national interests. It can act as a catalyst, guide or leader to inspire the people and help them develop themselves. It can never develop the country by itself; it can never substitute its efforts for the effort of the people themselves.

Why can we not put the whole responsibility on the government? What do we mean by development? Development means that every person in the society in his daily work is functioning with more energy, understanding, skill efficiency and productivity; he gains more return from his individual labour; he is more organized in his work; he coordinates and cooperates with other people; he has the advantage of supporting institutions: banks to loan him money, buses to take him, schools to educate him, research laboratories to develop new drugs. He needs the support of many institutions.

Where does the energy come from to run the country? You may have all the oil reserves of Saudi Arabia, the U.S. and the Soviet Union combined, but unless the people are energetic, that oil is not going to do you any good. It is not oil and coal that make a nation develop; it is human energy and enthusiasm; it's the feeling in the morning when you get up that you have so much to do today, so much to accomplish and so much opportunity. When a nation jumps out of bed each morning with these thoughts, no matter how little coal or oil it has, that nation is going to develop. Human enterprise and enthusiasm is released.

Most of us in thinking of development even today, do not think of jumping out of bed every morning. We don't think of a nationwide movement, the expression of millions of people taking effort. If you mention development to the average man, educated or uneducated, he will usually come up with one or both of two words: "Development? Where is the money?"

Think back to any experiences you have had in the villages, and you see rich landlords, families that may have been wealthy over many generations. They can command anybody in the village; they can sit in their house the whole day being the big man; whenever a VIP comes to the village, they will be the first to greet them. They can be the first in their village to have a car or a terraced-roof house. But for all their money that doesn't mean they are developed. That doesn't mean that their ideas are more progressive. It doesn't mean that they are more productive or that they understand any more than their parents or grandparents did. It doesn't mean they are educated. It doesn't mean they are contributing anything to the country. You can have a country of 700 million such people and it won't be a developed country because that money is not being put to the right use. Capital alone does not mean development. Capital is not even necessary for development.

If you study the development of the United States and Western Europe, capital came later, not first. It is the successful farmer who developed himself, took to modern agriculture, took to mechanized instruments, became highly productive and began to accumulate capital. In very rare cases capital has been the source of development. It may be a useful resource, it may be a useful ingredient, but by itself it doesn't do it.

Just before our seminar on Development Education which Professor Gomatinayagam mentioned to you this morning, I went to visit Mr. C. Subramaniam, our former Finance Minister, to invite him to participate in the seminar. We were talking about this subject. He said, "Look at all the Arab countries. They have collected so much of money, but they are not developing. They are building airports and fancy tall buildings but who is running the country? They are all Indians and Pakistanis and Sri Lankans running the country. Most of the people in the Middle East haven't acquired skills, modern outlook on life, or more energy. They are simply paying other people to run their country for them. That is surely not development and surely not what India wants".

The second common thing we associate with development is technology. If you have big power plants and steel mills, you will suddenly and miraculously be developed. The OPEC countries have brought in all of those technologies now. It has given an appearance of modernity to their cities. It is very impressive to go and see water being extracted from the sea in Saudi Arabia until you find out that the plant was set up by a German company with the help of an American engineering company and is being run by Indians.

One of the reasons that capital and technology seem to be the answers that we always think of, is that after World War II, Western Europe which had been completely destroyed, was the recipient of some $17 billion dollars of American money under the Marshall Plan. Between 1948 and 1951 around 20,000 crores of rupees was given over to the European allies to help them rebuild their economy. The results were really miraculous. Literally overnight the roads came up again, the hospitals, power stations came up again, and Europe began to prosper even more than it had before the war. By 1951 the industrial output of Western Europe was 44% higher than before the war. Looking at it from a distance, in a developing country like India, it looked very simple. We would like one of those Marshall Plans also, and we can do the same thing here. Unfortunately it is not that simple.

There was a big difference between Western Europe in 1948 and India and the rest of the developing countries. The biggest difference was that you didn't have to convince a German or a Dutchman or Frenchman that he could be prosperous. He knew he could be prosperous because he had been once but he had lost it. You didn't have to convince him that he had the necessary capacities. You didn't have to give him the skills; he already had them. He already knew it was possible; he had the confidence to achieve it again, and he had all the skills and education necessary. He had the spirit of entrepreneurship. He also had one more thing that India didn't have in 1947: he had the necessary social institutions. He had banks eager to finance entrepreneurial ventures; he had all the educational institutions, only the buildings had fallen. He had all the commercial institutions: the markets, ports.

Now look at India in 1947. Nobody had ever thought of prosperity. If anybody had thought of it they would never have dared to mention it to somebody else. Certainly nobody was confident, including the leaders, that India could become prosperous. Even if that confidence had been there, India lacked the skills for prosperity in the modern world. The educational system developed by the British had been developed with only one purpose: create a limited number of clerks and officers to run the British bureaucracy in India. It was not an educational institution that was designed to create entrepreneurs, or managers for industries, or engineers to create new industries to compete with the British. Even the basic transportation systems in India, the railways and the roads, were only developed to transport troupes around the country so it could be defended properly and to facilitate the export of raw materials and import of British manufactures. The railway system was never designed to go and saturate the rural areas where all the people are and where the economy has to be stimulated.

What were the social institutions at that time? What were the great financial institutions that were going to lead India into the industrial, modern era? The money lender charging 35% to 65% interest. And then the native sense of entrepreneurship had been stifled for 150 years. Some people don't even believe that Indians really are entrepreneurial. But if you think about the work of a farmer, what other occupation in the world requires as much entrepreneurship as farming? What is the first characteristic of an entrepreneur? He is willing to take risks. In a country where most farmers are dependent on the mythical, unpredictable phenomenon called the monsoon, taking all your accumulated wealth and putting it back in the ground again and hope that it is going to rain successively and continuously over the next two months, shows that there is no other occupation in the world involving greater hazard.

What is the second capacity of an entrepreneur? Even when he fails he gets up and tries again. How many farmers find every year that their crop is completely wiped out, either by a drought or a pest or a cyclone? And yet somehow or other the poor farmer is able to muster enough resources. He has saved just a little seed or grain, enough to last him through another year or another planting season, even if the former one has been a complete failure. Those are the basic qualities of an entrepreneur.

The problem in India wasn't that India doesn't have an entrepreneurial spirit. But the British had suppressed that spirit and refused to give it any outlet in any modern field prior to 1947. Add to all of that the final gift of the European man to India, the basic doubts that the Westerner has left: "After all, maybe we are inferior. Maybe it is right that the British should rule us. Somehow they are better than we are". That one completely false and ridiculous idea, which millions and millions of Indians accepted for decades, has done more damage than all of the other things that the British have given to India. But that was the situation in 1947. It's no surprise that capital and technology can't accomplish in India what they did in Europe, because the conditions were totally different. That is why the moment the country gained freedom, the first thing the leaders did was try to build up confidence. They gave people freedom, the right to a political participation. They tried to establish norms for social equality; they tried to break down this constant fear which had been built up over such a long time, which had inhibited people's energies. The greatest accomplishment of the Indian government, enough by itself to justify all the Plan expenditure over the last 36 years has been removing that sense of fear. That alone is enough to ensure that India will become prosperous. The only other thing it really needs is a sense of confidence, and that is coming now.

There is no country in the world with similar conditions to India in which a government has developed it. The only possible country we can look to for an example, and one that has inspired India in many ways, is the Soviet Union. The whole concept of centralized planning was borrowed from them. But there are two or three critical differences. First of all, the Soviet Union was never dominated by a foreign power. Secondly, they are not a democracy. Three, development has been imposed on the people.

One other example should be of interest to us, and that is Japan. Where did this miracle of Japan come from suddenly out of the blue? To the historians, Japan didn't really come up by surprise at all. Japan started working for its development a hundred years ago when it introduced the system of national, compulsory education. If there is one lesson which India can learn from Japan, it is the power of education to develop the country. If the government does nothing else but educate everybody, the country will develop itself. In fact, Kamaraj once said, ‘Give a man education and he will develop himself'. Education is development.

Around 1960 when Nehru was Prime Minister, he interviewed a new group of IAS recruits on the lawn of his residence. They were lined up before him, and he asked them, "You are joining a government of India which has dedicated itself to the development of the nation. Can anybody tell me what development is?" There was a long silence. One man said, "Development is having big industries". Nehru made a face and shook his head. He asked, "Anybody else?" Another man said, "Development is modernizing agriculture". Nehru said, "That's all very good, but that's not it". Other answers were: "Development is educating the people; development is giving everyone the minimum standards of living and health care, longevity and happiness; development is that everybody should have enough money and food and live in a modern house". Finally after all of this, Nehru said, "All of these things are the results of development. When we say development, what we really mean is: development of consciousness". The recruits looked a little perplexed and confused. They had gone through their whole education and nobody had taught them about consciousness; they never expected the Prime Minister to talk philosophy. What Nehru meant by consciousness is what I have been trying to say today.

Consciousness means awareness, energy and enthusiasm. It means confidence to go ahead. It means an aspiration, a drive to achieve a higher goal. That is what Nehru understood by consciousness. The greatest evil that the British left India was the doubt in the back of many people's minds: Are we really capable? Do not the Britisher, the German, the American somehow have something we don't have? We are all familiar with the image of the poor, illiterate, ignorant peasant. Let me give you a description. He probably doesn't speak the national or regional language; he speaks some local dialect. He is not literate and he has a lot of superstitions. He may believe that disease is something that comes from the gods. People even believe that the doctor is a messenger of god because he is never called in until it is too late, and every time the doctor comes the man passes away. He doesn't have a bullock cart; the really ignorant peasant carries everything on his head. In the worst of cases he doesn't even bathe. The one word we use to sum all this up: "He is lazy and he's ignorant". I am not talking about the typical conception of the poor, ignorant Indian peasant. The description I just gave is the common description that fit about 80% of the population of France 100 years ago. And France is considered to be the most cultured, civilized country in the Western world. In France a hundred years ago 80% of the population didn't speak French. The average man in the rural parts bathed twice a year and he washed his clothes at the same time.

100 years ago the French government did two things. They introduced and built all over the country roads that went into the rural areas. And they built schools. Roads and schools was their whole development strategy. No power plants, steel mills, research institutes or anything else. They made the people literate, they made them speak a national language and they opened up the routes that enabled the farmer to go and buy things in the towns, enabled him to bring in fertilizer and to sell what he produced in the village. That simple combination of two things was enough to dramatically change the entire country over the next 30 years. That was what launched France on its movement of national development, now one of the most prosperous nations in the world.

Certainly there is no description ever written about the Indian peasant that can be more discouraging than that one. There are a lot of other facts we have to consider in evaluating the native talents of the Indian people. A few years ago, the Director of one of the Indian Statistical Institutes went to Japan. He was touring a watch factory and he was watching the workers assemble the parts. In the factory at that time there happened to be a group of Indians who were undergoing training. The Director went up to the head of the training program, a Japanese man, and he asked him, "We hear that your Japanese are really talented people. How do our Indians compare?" The trainer said, "I have trained so many people. As far as native talent goes, the Indians have as much talent as the Japanese". A Japanese architect came here about 10 years ago and happened to come across a group of carpenters making furniture. He saw the unusual assortment of tools that the Indian carpenter uses to make his furniture. He watched them for about an hour, and expressed utter amazement that any human being with such poor tools could make such magnificent furniture.

During World War II the Allied Armed Forces employed many Indians and other nationalities in a number of services. People from South India were particularly noted for their incredible capacity to repair engines. They were given the highest ranking.

These are all isolated examples and you can give hundreds and hundreds of them. Go to any international institute anywhere in the world and among the top few people you will find at least one Indian. Go to research laboratories in the United States and 15% of the personnel are of Indian origin. Today the most prosperous group of non-U.S. citizens in the United States are people of Indian origin. Between 1960 and 1981 nearly 10,000 Indians obtained Ph.D.'s in the United States, more than any other group from any other foreign country.

Take the example of the Indians who have been in East Africa, having been the core of the East African economy for decades. Or take this comment by an internationally famous computer scientist from the United States. He calls the work of Indian computer scientists: "fantastic". He says, "In most international scientific congress, the major contribution is from Indian scientists. India has the best scientists in the world outside of the U.S. and the Soviet Union". Considering he is from the United States, we may say that he is prejudiced also.

I don't think I have glorified the talents of the Indian people as these are known facts. But there is another side of the story and we want to be practical and factual. It is true that people the world over come to India and admire the magnificent ivory and wood carvings that have been done by craftsmen here. It's also true that if you go into the average home and try to shut the door or window, half the time they don't fit properly. Go to the South Indian temples and one is filled with amazement at the work of the temple stone cutters. But in the average Indian house you see that the masons don't know how to lay a floor in such a way that all the water drains in one direction.

Take the average typist. The normal minimum skill for a typist in the Western world is 50 words per minute, and now with modern machines, much more. A few years ago we put an ad in Pondicherry to get a typist and we got about 25 applicants. The best of them was doing about 27 words a minute, half of which were unrecognizable because they didn't exist in the English language. Car drivers in India are very proud that they are able to handle the conditions here, which I personally feel are very difficult. But the way they drive the cars is enough to drive those cars into the ground. They have no conception of how to change the gears or how to save the brakes - they accelerate and then they stop. They don't have the basic skill to preserve the engine and transmission of the car by driving it properly. In Pondicherry there are at least 100 workshops for car repair. You get to know all of them because each time you take your car to one, you never feel like taking it back to them again. Each mechanic in each shop is an absolute expert in one tiny thing. One repair shop always says that whatever the problem it's an electrical problem. Even if you come in with a flat tire he will say it's an electrical problem! How does it come about? It is not some great inferiority of the Indian nation: it is very simple. 95% of these people have never had formal training. These 100 workshops have all been started by people who originally were apprentices in other workshops under people who had been previously trained as apprentices in other workshops. So what do you learn? As an apprentice the maximum you can learn is what the man who taught you knew. No master likes to give all his knowledge to the apprentice. So they usually come away with something less. Whatever you don't know is filled in by superstition or by trial and error, at the expense of the man who owns the car.

It is not just at the lowest level that skills are missing. About 5 years ago an auto engineer from Madras went to work in U.K. in an auto factory. They were designing a new model vehicle there and after the vehicle was completed, his colleagues turned to the engineer and said, "Go ahead, you've done great work, take it out for a ride". The engineer looked very embarrassed and blushed and said, "No, I don't want to". They pressed him saying, "You be the first, it's a great privilege". Finally he said, "I don't know how to drive".

Western agricultural scientists and farmers who have come to India have marveled at the capacities of the farmers in Tanjore and Punjab. But it is also true that there are many places, some not too far from here, where the farmers manage to use twice as much water as the farmer in Coimbatore to grow half as much crop as the farmer in the North. It is only simple want of education. What I am trying to say is not an indictment of the native capacities of the Indian people. I am trying to say something that should be self-evident and obvious. The Indian people have all the native talents and capacities and intelligence required to do anything. That intelligence is absolutely unquestionable. There was a Dean of the Medical School in Davis, California who told one of my colleagues last year, that the Indian physicians on his staff are among the finest physicians he has ever seen in the world. These are common statements in the West. What India lacks is not native capacity; what people lack is training and skills, skills even in agriculture.

Take the agricultural training system. How could we be lacking skills in agriculture? We have 27 fine agricultural universities; we have so many agricultural colleges, polytechnics, research institutes, etc. A few years ago I was invited to the Tamil Nadu Agricultural University at Coimbatore to talk on a very unusual subject, Development Education. The one point I made there was: here is a great institution. What is its purpose? Its purpose is to train new teachers and lecturers to teach in the agricultural university; its second purpose is to train scientists to be in the regional research labs' its third purpose is to train officers who will go into the agricultural extension and the banks. And what about the farmer? Where does the farmer come into all of this? Who is training the farmer? Even at the lowest level of the polytechnic people are being educated to go and become government employees under the extension officers who were trained at the university. Even today India does not have a system of comprehensive education and training of its farmers in the basics of agriculture.

On our development project near Cuddalore, we are in a cashew area of about 10,000 acres. The average yield from those gardens is one bag of nuts per acre per year. But there is a village not 8 miles away with very similar conditions where the farmers are getting 6 to 8 bags per year. At current prices that would mean a net profit of more than Rs.10,000/- per year per acre from cashew. They simply do 3 things: they weed the garden and keep it cultivated; they add manure every year; and some of the farmers irrigate it.

Here in South Arcot District we have the oldest sugar factory in the country, E.I.D. Parry at Nellikuppam. Yet if you look at the yields of sugarcane in this district, they are among the lowest in this state. How can the farmers, who have been cultivating sugarcane longer than anyone else in the country, have the lowest yields? Simply because even today, the farmer doesn't know the value of adding manure. He is so attracted to the chemical fertilizers that he never replenishes his soil. And since he has been cultivating cane for longer than anybody else, his soil is more depleted than anyone else. One new information communicated to him can dramatically improve the cultivation of cane all over the district.

My point is not sugarcane or cashew or even agriculture, but that India lacks the institutions today for formal training of the farmer. And that's not all. The same is true in every craft. That's why the water doesn't drain. The mason has not been trained. That's why the door doesn't fit properly because the carpenter has not been trained; he has learned it all by himself. That's why when you go to the courts and you want to know what is the procedure, the lawyer tells you to ask his clerk. You ask the clerk and he says one thing; you ask another clerk and he says something else. That is because none of the clerks have been trained in their discipline. They all go to the court, tag around and carry bundles of paper for the lawyers, stand in court year after year and accumulate a lot of knowledge. But they also accumulate a lot of superstition that is passed on from clerk to clerk, which soon becomes the common practice.

India needs training for its farmers, craftsmen, for every conceivable vocation, whether it is the vakil's clerk or the book-keeper or the petition-writer. When you go to the petition-writer in India he's something like a swami who has some mystical process for writing down the petition in the proper way which nobody else knows how to do. Everybody can write their own petitions if there is a simple course available.

Another type of training that is very much required is training in entrepreneurship. Though the native talents for it are here, those talents have not been encouraged and brought to the surface. There was an interesting experiment done about ten years ago in Gujarat. Perhaps you have heard about it in your course. About a thousand young people from all walks of life, from agriculture and government employment to shops, were invited to participate in an entrepreneurial training course. The program lasted 7 years. In 1977 there were 897 new industrial ventures as a result of that training program. They were just ordinary people from all walks of life. 80% of those ventures were running profitably, which is as high as any averages in any country in the world. Entrepreneurial training is needed not just for industry, but for starting new nursery schools or engineering colleges, for opening up new hotels, photocopy shops, cottage industries, medium-scale industries, even for running plantations.

My theme today has been: awareness, confidence, energy and enthusiasm are not enough. First you have to have the basic talents. Then you have to have all the necessary skills. India is full of talents, but still many skills have to be developed by people at all levels of the population, especially in the rural areas.

Last year I was working on a new industrial project at Thirukoilur. The company there was employing 27 graduates as supervisors in the factory. One day I called one of the graduates, an MA, and I told him to please call the bank in town. The man looked at me in a strange way and I didn't know what the problem was. I said, "Go ahead, please call them!" He went over and picked up the phone and began to turn it this way and that. I didn't understand anything until another man in the office came over and said, "Sir, he doesn't know which end you are supposed to speak into".

I want to end with a fascinating story which highlights a point I want to make tomorrow, about one more essential ingredient for development. It's a very famous story also, though even in the United States where it occurred, very few people really understand the lesson it has to give us. It's the story about a young man in 1903. He had $25,000, which by current exchange rates is about Rs.3 lakhs. It sounds like a lot of money today, but there are thousands and thousands of people who could invest 3 lakhs today in an industry. He was a car mechanic and he started a new factory to make automobiles. In 1903 all the automobiles in the world were made by an old process, because all the original automotive manufacturers started in the field by making carriages and carts to be drawn by animals. The way they made those carts was to assemble it in one place and bring all the parts to fasten them on. It was a stationery production process. The biggest workshop in the U.S at that time was producing about 1500 cars per year. That seemed like a big quantity because the cars were very expensive at that time. The cheapest car available was $1000. The average car was $2000. That was simply a price that nobody could afford. Everybody believed that cars were meant only for the very rich. But this man had an idea. He thought there must be a way to make these cars less expensive. He had the crazy idea that if he could produce a car for $500 instead of $1500, then he could sell it by the millions. He got a hint. He went to a factory in Detroit which was producing a little mechanism that goes in the engine, which was called a magneto. He saw that at this particular factory they were doing something very clever. Instead of each man sitting and making his own magneto, they had a moving line and as the magnetos went down the line, each man added one small part to it. That is what we call a moving production line. This man thought he could make cars on a moving production line too. He started speaking to his friends about his idea of building a gigantic factory, 5 stories high with shuts and conveyors and a big moving production line at the bottom. Everybody laughed at him. His name was Henry Ford. He built the first factory in the world for production of cars as they moved along the conveyor. The results weren't exactly what he expected. They wee much more than he had ever dreamed of. Between 1911 when he first started his factory, and 1927, his original investment of $25,000 multiplied in value 25,000 times. In 1927 he had cash in the bank of $700,000,000. That is about Rs.900 crores, from an original investment of 3 lakhs. In 15 years out of that factory he produced 15,000,000 cars. All of this was done by the introduction of one system.

I have said that energy, confidence, conviction, skills and talents are necessary for development. One other essential ingredient is systems. Systems have an enormous power. The U.S. has been built up on the dual basis of skills and systems. And the very interesting thing about systems is that they don't necessarily cost money.


Yesterday morning I said that the first thing necessary for a nation to develop is it must believe that it can develop. Then there has to be an awareness of the opportunities for development. When people in a country see those opportunities and become excited and enthused about going out and tapping those opportunities and achieving, the development process begins to take hold. But in order for development to be achieved, there are hundreds and thousands of types of skills that people at all levels of the society have to acquire: from driving a car to operating a computer. Skills are what the individual can possess. The skill is the know-how that he has for any activity. But the society also needs skills and know-how for organizing activities. We call those skills in a society: systems.

In the 16th Century the great Moghul emperor Humayan was on camp away from his headquarters. His wife was expecting their first child. He was extremely anxious to receive word and to know immediately at the time of the child's birth whether it was a boy. He was looking for his successor. He was just about to leave camp and be on a military campaign about 100 miles away. He knew the child may be born at any moment. He called the ministers of his court and put a question to them: "When my child is born I want to know immediately whether it is a boy. Which of you can suggest a means so that I can have that information immediately?" All the ministers were silent. Finally one minister stood up and offered his idea that the best horse in the kingdom with the fastest rider could be immediately sent as soon as the child was born. The emperor said that even the best horse and rider would take two days to reach him. After some time another minister suggested they could have a string of horses every ten miles in a relay system bringing word to the emperor. The emperor said it would surely take 24 hours for word to reach him even in those circumstances. After a long silence one of the oldest, wisest ministers stood up and said, "You leave it to me and I assure you that within 10 minutes of the child's birth you shall know if it is a son". The emperor was intrigued and pleased by these words and he started on his campaign. The minister gave orders for towers to be erected every one mile between the town where the emperor's wife lay in bed and the camp near the battlefield. They erected tall poles and on top of each one was a man with a drum. At the moment of the child's birth, the drums started beating, and in a matter of 5 minutes the message was relayed from one pole to another over the hundred mile distance. The emperor was informed that indeed his first child was a boy. That boy later became the great emperor of India, Akbar the Great.

There was no great technology involved in this solution to the problem. What the minister did was to demonstrate the power of a system. Take many people together, organize them in the proper fashion and as a group they can accomplish something that none of them can accomplish on their own. That is the power of a system.

Yesterday I spoke to you about the power of the system that Henry Ford used for mass production. It has become a system used all over the world for production not only of automobiles but of virtually every type of industrial product. I will give you another example of a system closer to home. A few years ago some journalists from National Geographic Magazine in the U.S. came to India. They were doing a feature article on India. They came to know of an extraordinary system being used in Bombay. In Bombay you have people coming from long distances outside of the town to go to work daily in the city. At least 200,000 of these people are having their noon meals delivered to them at their offices in tiffin carriers from their homes. This is accomplished by a unique system for which we have no similar example in the U.S. It is what they call the ‘dubban wallah' system. Every morning about 3000 young men go to the homes of workers in the outlying areas who are commuting into the city. They collect tiffin carriers at about 11 o'clock and carry them into the city. Nothing is very extraordinary about that. 3000 people carrying the meals for 2 or 3 lakhs of people. But if you think about it a minute, it's not so easy. If you happen to be a dubbah wallah collecting tiffin carriers from apartment flats in the suburbs, and you want to take those carriers into the city, what you will find is that of the 100 meals you are supposed to deliver, 10 are on one side of the city, 20 are on another side, another 30 are on a different side; in fact, you may have tiffin carriers that have to be delivered to all parts of the city. If you deliver all of them yourself, the last man will be getting his noon meal sometime around sunset. The unique aspect of this system is that each of these men takes the train into the city, and at the station he exchanges tiffin carriers with other men who are going to different parts of the city. He keeps exchanging until all the tiffin carriers he has are meant for one particular are of Bombay. Then he goes there and delivers them all there. In the evening the process reverses. The same man goes back to the offices, collects the empty tiffin carriers, goes back to the train station, exchanges them again with all of his colleagues, and the tiffin carriers go back to their houses in the suburbs. The National Geographic journalists were so full of admiration for this unique system that they went and published an article on it.

Whether we are talking about a system of communication, or a system like the drum beating, or a system for transporting goods, society needs literally thousands of systems in order for it to become prosperous. Systems enable 3000 people to accomplish a work that would otherwise require maybe 50,000 people. That is the great efficiency of the system. We have many systems here in India, and probably the most dramatic way to imagine the power of the system is to think about what would happen if the system were removed for a minute. Take the banking system. What would happen to Indian commerce today if for one week or one month there were no banking systems? Every rich person who has money would be sitting at home trembling at the thought that any moment they may be robbed of their life-long savings. Every young entrepreneur who needs capital to finance his business would be sitting empty-handed. The banking system is an extra-ordinary system that enables people who have more money than they need for spending now to store it safely somewhere. Other people who need more money, either for consumption or investment, are able to borrow it and repay it later. Without that single system the entire economy of the world would come to a halt.

Take another system: the regulated market. Before the regulated market was introduced, the farmer was virtually at the mercy of the local trader, who could come and bargain him down to the lowest price. The farmer couldn't afford to take his goods long distances. The government has introduced a simple system. Farmers can bring their product to a convenient location, allow the traders to bid and whoever bids the highest price takes it. This has helped the farmer so much.

There are thousands of systems. Another very successful one is the hire-purchase system. Hire-purchase for automobiles and auto-rickshaws, even for industrial equipment, is all very recent, mostly in the last 10 or 15 years. It first started in the automotive industry. Because of the introduction of this system, a man can buy a vehicle now, use it, earn money with it, and pay out of his earnings to the person who loaned it to him. He gets an asset that he can use for production, earns the money and then pays. It's a great system. Because of that, between 1960 and 1980 the number of motor vehicles on the roads in India increased by 5 times.

A few years ago I bought a small electric typewriter from the U.S. for use in Pondicherry. After about 6 months it broke and I wanted to get it repaired. We took it to a shop in Pondicherry and they said they didn't know how to repair electric typewriters. So we went to Madras and went to one after the other repair shops who said, "I'm sorry, we don't repair this type of machine". We went from one end of the city to the other following up leads and finally we gave up without repairing the typewriter. On my next trip to Madras I happened to go to the US Consulate and there I saw an electric typewriter. I asked them where they got it repaired. They told me about a place in Mylapore. I went there and found it to be a place repairing electric typewriters. If I had been in California when my typewriter broke down, all I would have done is to take the telephone directory and open to the back, what we call the ‘Yellow Pages', and look under the heading ‘typewriter repair'. In that column every typewriter repair shop in the city would be listed at no cost to the shop. It would also list what special brand of typewriters each shop repairs. Right from the telephone directory I can know exactly where I should go to get my machine repaired. Instead of spending a week to get it done, I can do it by a phone call.

That is a very small incident, but if you are ever involved in the starting of an industry, you'll know that there are dozens of things you need to get done, and you don't know where to do them. The only process here is to ask somebody. If they don't know, you ask someone else. It is an enormous waste of time, energy and money, simply because we don't have the information available. Whereas in the U.S., the simple system of the Yellow Pages enables you to know for any product who will handle it anywhere in the country. It's a very great and simple system which allows the economy to grow rapidly. There are so many systems like that. Systems can also become very good entrepreneurial ventures for young enterprising businessmen.

I'd like to speak now about your own development. I'll start with the purpose of this course. The original conception behind the Development Studies course was to help the students understand what is happening in the country today. It was to help you understand that India is going through a very unusual phase; you are very fortunate to be growing up in India today rather than the India of 10 or 20 years ago. There are far greater opportunities today in the country than there ever have been before. We hope that as a result of this course, you will understand better than many others in the society what is happening to the country. We hope that you will be able to make decisions when you leave the course, that will help your own careers and contribute to the development of the country as a whole.

Almost 100 years ago in the U.S. there was a man working as a Station Master on the railways. At that time the post was quite a prestigious job. He received a consignment of watches from a watch manufacturer to be delivered to someone in the town. He went to the watch shop and said he had a consignment of watches for him. The owner of the shop said he was going out of business and he didn't want the watches. The Station Master wrote to the watch company and said the customer had refused to take the watches. The watch company wrote back to him and said, "Why don't you sell them?" The Station Master had never thought of selling watches. There were a dozen watches costing $10 each. He figured if he could sell them even for $12 or $13 he would make a good profit. So he wrote letters to all of his friends who were Station Masters up and down the line. He told them they were only half the price of the watches selling in the stores. He offered to sell them for $12 and suggested they could sell them again for $15 which would be easy for them. Within a week he had sold all the watches and made some profit. This set the man thinking: why was he sitting all day long in the office? It was such an easy business which could be expanded to other products and he could make a lot more money if he left the railway. So he went into the watch business. He started selling watches by putting ads in the newspapers. He offered the watches for $15 and a return-back guarantee if the customer wasn't satisfied. When he started he had no money. Gradually his business expanded. Instead of using ads in the newspaper, he came up with the idea of making up a little catalogue showing all the different watches that his company sold. He started posting that catalogue in the mail to people living in rural parts of the U.S. Soon his business began to grow. Then he realized a great truth, which is equally a truth in India today. In the 1890's the American farmer began to become prosperous, as farmers all over India have been becoming prosperous in the last 25 years. He said if there were some way he could get products and sell them to all those prosperous farmers, he could develop a huge business. The farmers in those days may have been a hundred or even several hundreds of miles from the nearest town, having no way to buy their products except by traveling long distances. Even the railways didn't extend into most of those areas. They had to rely on small shops or traveling salesmen who came through every 6 months with a cartload of merchandise. This man decided to expand his catalogue and send it to all the farmers in the rural areas. Over the years his catalogue grew until he was selling thousands of different products through the mail. He sold tools, home furnishings, clothes, fabrics, etc. The result was that by the year 1900, this man's business had become $5 million. He had started off with 12 watches. But that wasn't all. For the next 7 years, by spreading his catalogue around rural America, his business grew to $50 million. He became the largest retail seller of merchandise in the whole world. He did it through a system, the mail-order catalogue. That is not the end of the story either. Between 1907 and 1920 his business increased a further 5 times to $250 million. By that time he had retired and other people had taken over the company. By that time people in the city were becoming prosperous so he began to open retail stores all over the country. Today that company, started by a station master with 12 watches, has an annual turnover of about 50,000 crores of rupees. The name of the company is Sears Roebuck.

There are a lot of similarities between India today, especially rural India, and the position of the market in the U.S. at the time that Richard Sears started his mail-order business. In 1970 the entire rural market for consumer goods was about Rs.5500 crores. In 1980 that market was Rs.13,500 crores. Even after adjusting for inflation that shows it has grown by 25% in 10 years. That tells you that something is going on out there. For consumer durable products, the rural market in India is larger than the urban market. We think all the money is in the city but it's not true. But how do those people buy goods? There are no systems, or if there are, they are very poor. There is an enormous untapped potential out there in rural India today. That explains why 25,000 crores have been collected and put into the nationalized banks. One of the reasons they put it in the bank is they don't know how to spend it. This is an ideal opportunity for young entrepreneurs to find new systems and new ways to distribute products in the rural areas that can tap that potential for consumption. On single example I will give you. Hair shampoo has always been quite an exclusive product in India. There are several reasons for it. The main reason is it is sold in large bottles and the government considers it a luxury item. They put a 35% duty on it and a small bottle of shampoo costs Rs.15 or 20/-. One man had an idea. He took these big bottles of shampoo and re-packaged it in tiny little plastic packages that sell for Re.1/- each. He's not selling the shampoo for a lower price but simply selling it in a smaller quantity. At first everyone though, "Who will buy this?" What nobody realized is that today in India there are hundreds of millions of people who would like to use shampoo, who want to use it, but for whom that Rs.18/- bottle is still too much. In the first year of his business, the man sold for Rs.10 lakhs. The brand name was ‘Velvet' shampoo. After that I have not heard about it, but I know it's selling everywhere, perhaps even in the North. Simply he used his head. That shows the opportunities that are there.

Someone asked yesterday, "Where are the opportunities for us today in India?" There are more opportunities today than there have been at any time in the last 100 years. In many respects India has more opportunities today and young people have greater opportunities than their counterparts in the U.S. Where are those opportunities? I will give you one example.

In the last two years the government has introduced a self-employment scheme and they are spending Rs.1000 crores per year to give self-employment loans to young entrepreneurs. The loans are anywhere from Rs.3,000/- to 25,000/- without security or margin. I know a young boy in Pondicherry who had no money at all. He was only an SSLC educated boy and he applied for a Rs.25,000/- loan for a thresher. In the first year he has earned a net profit of Rs.10,000/- on the thresher. He himself says that other people doing the same thing have earned even Rs.25,000/- profit in a single year.

An engineer who was trained in France had a job in a large Madras company as a Plant Manager at Rs.3,000/- salary. He had a great future and the management loved him. Eight years ago he resigned that job to go and work in another industry. Last year PIPDIC sanctioned for him and two partners Rs.1.1 crore for starting his own industry. On a 110 lakhs project the total investment of the partners was Rs.1 lakh each. In what country in the world can anybody find a 1 crore project with 3 lakhs investment? The common experience in the U.S. is if you want to go and borrow $1 million from the bank, they will ask you for $2 million of security. The only people who can borrow money in the US are the people who don't need it. Here, after nationalization, the government has introduced programs which enable those who don't have money, but who have a skill or idea or talent, to get the capital they need.

There are opportunities available at all levels in the country. Have you ever thought what it takes to succeed in life? There are a lot of superstitions about success and I have just spent the last 5 months doing a study in the U.S. about successful people. During that time I met and talked with more than 120 highly successful businessmen who were running companies anywhere from 1 crore to 500 crores in size. We asked those people what the key to their success was. The most common answer from everyone was: hard work.

I met the son of the founder of a $3½ billion hotel company. His father founded the company but most of the growth of the company had been accomplished by the son. I asked that man what the key to his success was, and he said ‘hard work'. We talked to other people in his company and they all said the same thing, hard work. Even now when he is a billionaire, he works harder than anyone else in the company. We asked him why he did so when he had more money than he could ever care for. When he had thousands and thousands of employees to work for him, he could very well sit back with his feet up on the table. He said, "I guess I work hard so that they will too".

We looked and studied many answers. Is it charisma? Is it some magical personality that makes one person a success? Is it great intelligence? People frankly told us that they weren't any more intelligent than their classmates. But they were willing to work hard.

I have a friend who was born in Gujarat, the son of a cobbler. He is not particularly outstanding or brilliant, but he was very hard working. This earned him a special scholarship to go to college in the United States. He got a degree, then a post-graduate degree, then a Ph.D. He is now Professor of Sociology at a college in the US. He did it through hard work.

There is another man named James Frederick, who was a salesman 15 years ago. He found out that he was a good salesman and he was making a lot of money for other people by selling. He decided to go into his own business and sell for himself. Today 15 years later, James Frederick is the owner of a 15 crore business. The name of the company is Coromandal Indag. They produce fertilizers and pesticides.

In 1943 there was a poor weaver who lived just two miles from here. He had one handloom. He really believed in the importance of education, so he sent his eldest daughter to school, at a time when very few young women were going to high school. She worked hard because her father, who was uneducated, was so interested in education. She went on to college and graduated from this university. She went on to take an M.Sc. She became Headmistress of a school and she married a teacher. She had two daughters whom she educated. Her two brothers had also been educated and they became engineers. She married her two daughters to her two brothers and they are all in the U.S. now. They were the children of a man with one handloom in a village who believed in and understood the importance of education.

Another friend of mine, a brilliant boy, went to an engineering college and when he came out all the big companies offered him jobs. His father had been a labourer in the village, and had built himself up to starting a small oil mill. This boy said, "I am going to be an industrialist". He started with Rs.7,000/-. Ten years later he had a business for Rs.7 lakhs. By 1983 he was having a yearly turnover of Rs.50 lakhs.

When I was in Delhi I was driving in an auto-rickshaw. The man started speaking to me in English. He was a very jolly man and I asked him how he was speaking English. He said, "All my sons are educated, they are all graduates. I came over from Pakistan at the time of the partition and I lost everything. I have started from the beginning and now I am a success. I have 3 autos. I drive and my sons drive. We earn Rs.8,000/- a month profit. I am going to buy more autos. I want my sons to do better things".

When another friend of mine, a graduate of this university, passed out he was offered a job at the Food Corporation for Rs.1,000/- per month. He turned down that job because he wanted to learn a skill or trade. He went and worked as a supervisor in a handmade paper factory. He worked for 5 years. The one thing everybody will tell you about this boy is that he worked hard. That boy was working with us on a special export project in Thirukoilur and 5 months ago his family asked him to come back to the village to manage his village lands. When this boy graduated from college, he had a goof future before him, a good salaried job was offered to him. But he gave it up and went into industry, and from industry he has gone back to the village. It all looked a little backwards. But in the last 4 months he has taken the knowledge he acquired during the last 7 years and started a cardboard industry in his village. He came and met me last week saying, "Sir, this year I am going to earn Rs.2 lakhs profit. Next year I will double it".

Another man I know, a graduate from the agriculture university, got a job with Food Corporation in 1969. In 1972 he left Food Corporation and took up a job in an industry as a manager on Rs.450/- per month, half of what he was earning with FCI. He used to travel by bus from Madras to Chingleput everyday for an hour and a half with his attender sitting next to him. Today that man is a partner in industries with an annual turnover of more than 100 crores. He is one of 3 partners. He gave up a permanent job and went to work at half the salary in a business.

Some of these are old examples, 5 or 8 years old. Things are much better than they were then, much truer than they were then. They are happening everyday in every town all over the country. There is enormous potential in India today. There is only one major obstacle. We don't see the potentials, or if we see them before our eyes, we don't believe in them because our attitude is different.

In the United States we didn't have this problem. There was never a time when the average graduate grew up with the ambition of getting a job in government. Today if you say, "My father is a government employee", if people are polite, they will keep quite, but they will think to themselves, "It's too bad". Employment in government has never had prestige in the U.S. But if you say, "My father is a businessman, or an industrialist", people feel that is wonderful. It doesn't matter if it is big or small. He is somebody who takes initiative. The situation here is different and there is a simple reason for it. Prior to Independence the only opportunity for advancement was through the government. All the power and prestige were with the government. A Collector in 1920 was earning Rs.3,000/- which is worth 20 times that today. But we are not living in the India of 1920; the British Raj is over. The Collector is still only earning about Rs.3,000/-.

The prestige in the future of India is not with the man who goes into a salaried job; it is with the man who sets out and accomplishes something. Those are the people whom society is going to admire. They will be rewarded by the society. Today it is being done. The opportunities, the money, attention and prestige are all coming to people who achieve something on their own. That is the policy of the government and it's being implemented through so many programs like the self-employment scheme.

The problem here is not a lack of resources or talent or money. It's simply a question of attitude. Do you have an attitude that belongs to pre-independent India, to the past? Or do you have an attitude that is appropriate for the conditions today? Do you see those conditions? The purpose of this course was to help you see them more clearly.

There are 4 essential ingredients for a country to develop. The first is that people have to have rights. Those rights have been given in India after Independence. In my country, the only thing the government gives you is rights. They stop there. Whether you succeed or not is left to you. If it were prior to 1947, we could say that there were no rights here. But that is no longer the case.

The second essential ingredient for development is that there must be opportunities. In every society that is growing, there are opportunities. And this society is growing very rapidly. The government is not only giving freedom here, but it is actively creating those opportunities all the time through new research on technology, through export promotion councils, through self-employment loans. There are educational, economic, export, training and all types of opportunities.

The third essential ingredient for development is that an individual and a country have to have confidence. That is something that is very hard for a government to give to its people. India today is far more confident than it has ever been before. It has a very dynamic and confident leader who inspires confidence.

Fifty years ago in Madras Pachiappa's College used to have to advertise to get students to file applications. They were not able to get students to even apply for the college. They used to pay 12 np, the cost of the train fare, for students to come for the interview. The opportunity was there even 50 years ago but nobody had the confidence to even apply. Nobody thought they could become a graduate. Today how many millions of graduates there are in the country. Today the confidence needed is not to say, "I can become a graduate" but to say, "I can become a success on my own".

The last thing needed for development, obviously one of the essential ingredients, is money. You may have the rights, the opportunities, the confidence, but some money has to be there. In the 1950's when Rajaji was the Chief Minister here he wanted to establish an aluminum plant in Tamil Nadu. There was only one aluminum plant in the whole country. He approached the biggest industrialists of the day and offered to give them as loan Rs.30 crores, the entire investment value. Not only that, but he guaranteed full supply of power at 2½ np per unit. All the big industrialists said, "How can we do something like this; it's something new for us". Finally one enterprising man came forth and started the Madras Aluminum Company. I don't know a single example in the U.S. where the government has given $30 million to anybody to start anything.

About 3 years ago a colleague of mine and myself contacted a company in Southern California which had developed a new technology for growing fish. This was a wonderful technology because in an area of 1 acre where normally you can grow about 1½ or 2 tons of fish, these people were able to grow 20 tons. The problem was no bank in the United States was willing to loan them money. Wherever they went to the bank, the bank said, "This is something new. You may have proved it in the laboratory but how do we know it will work?" When we saw that technology we thought it was an ideal technology for India. With the investment climate in India today the banks will love a project like this. We approached those people and invited them to India to set up the project here. They wondered if anybody would give us money for the project. We told them that the banks and the government in India are fully supporting development and would certainly give the money. So they came over. We went to Bombay to the National Bank of Agriculture and Rural Development and presented the scheme to them. Within a month the Managing Director of the bank came down to Pondicherry to meet us. He said it was a wonderful project for which he would give Rs.6 crores. The Americans were just not able to believe that a bank, a government bank at that, was willing to invest 6 crores in an unproven technology. That project has come up now and it is a great success. The bank is now asking us to expand it. They feel it should be done all over the country for which they are prepared to give 100 crores. They asked us to approach farmers and get them to set up 1 acre of this special fish cultivation, and they would give every farmer we recommend a lakh of rupees without any margin or security. For that one lakh of investment every farmer will earn a minimum of Rs.1 lakh per year net profit.

This is what is going on in the country today - for big industries and for very small industries both. We have a development project near Cuddalore where 17 years ago the average income from an acre of land was Rs.100 per year. It was dry land with no water. Farmers can grow some ragi or kambu in the monsoon season. Today that village has 440 bore wells and the bank has come in to adopt the village. They have taken not only to paddy cultivation, but they've gone in for sugarcane and vegetable cultivation. Today in that village there are 100 acres of banana which have been leased out by growers to the merchants for Rs.25,000/- per acre. Other farmers are growing roses or jasmine flowers that earn Rs.50,000/- per acre. This village had originally been so poor that when the Chairman of the bank came to inaugurate the scheme in 1969 and saw the villagers there even without shirts, he turned to our Secretary and asked, "Why did you have to pick a village like this? These people don't even have clothes!" Now in the same village are tractors, brick houses and farmers are prospering beyond measure.

I will close with a story. One day Shiva and Parvati were standing up in the heavens looking down at the earth. With the liberties of a wife, Parvati started to complain. "What kind of a god are you? You let all of these people down there suffer so much!" Shiva was quite offended by the remark. Just to prove her point, Parvati pointed to a man walking along the road, an obviously poor man who was continuously praying, and she said, "See, there is one of your ardent devotees, walking along the road, with nothing. Why don't you give him something? At least prove that you are generous with one man". Shiva looked at his wife and shook his head and said, "It won't work". But Parvati pressed him to do something. So Shiva took a gold bar and threw it down from the heavens, and it fell on the road right in front of the man. Just at that moment the man had been thinking to himself, "I wonder what a blind man feels like when he walks along the road!" So he closed his eyes and he walked right past the gold bar.

Today in India, the government is dropping gold bars on the roads everywhere, and most of the population is closing their eyes and saying, "I wonder what it is like to be a blind man". The government is acting like Kamadhenu herself, giving opportunities, rights, confidence and money as no other government that I have ever heard of in the world. Don't be like the blind man. Open your eyes and receive what is being offered to you.