Palaniappan Chidambaram - Finance Minister, India HARDtalk

like to eradicate the Taliban from Pakistan. Now on BBC News, it's time

for Hardtalk. A very warm welcome. A special

edition of HARDtalk from India looking at the state of the nation

as it gears up for national elections. Do Indians believe this

vast country is on the right track to make the most of its economic

potential? There are signs of change all over the city. Let's take a

look. This is the shopping maul in suburban deli. A quick look at the

shops and shoppers show that India have had unprecedented decade of

economic growth. Second only to China. The middle class has

expanded, and they have money to spend. For any international

business, this represents a market that they would love to get a piece

of. Describe your personal economic situation right now. How would you

describe it? Good. I am doing well. I work for a British company. We

have our own house and car. A lot of things depend on the elections, but

the individual lives, I think they will not be affected too much. I

people getting richer in the middle-class? They are. This was in

the case a few years back. Real estate is on an upward trend. People

are getting rich because of the properties they own. India is

growing. Money is going outside. Being optimistic, I would say India

will be a great country. The poor people getting poorer. Does that

worry you? You are a middle-class person. It is putting a big effect

on us. We are more reliant on credit cards and more in debt. Had you feel

knowing that a mile or two from here, there are very poor people

getting poorer, who have virtually nothing. Visit make you feel

uncomfortable? Definitely uncomfortable. These people should

get the ability to work. Soon there will be no middleman. Rich and poor.

There is a new sense of caution even here, because India's economic

growth has slowed right down. Inflation is up, and India's

economic rise can no longer be taken for granted. I've travelled a few

kilometres from the shopping maul, and frankly I might as well be in

another world. This is the deli that outsiders generally don't see or

smell. It is easy to believe that one third of Indians asked all

living in poverty. Half don't have access to a proper toilet. India's

economic inequalities are growing. People have a question, what have

the country 's leaders done with India's new wealth? Tell me, what is

life like for you living here? Did you think that the government

looks after you? Do they care about you?

She has invited me into her home. Let's see what conditions are really

like inside this long. -- slum. They have attempted to make it as much of

a home as they can. They've got clothing and bedding stored in what

is the bedroom area over there. If you come here you can see something

quite extraordinary. They have set up a little kitchen area. Despite

them having very little, they have made a wooden floor and vote in

makeshift fan in there. They have tried to make it as much of it

decent home as they can. There is no running water, electricity is

intermittent, every time it rains it comes through the roof. You have

lived here for 20 years. Describe what life is like.

Does it make you angry when you see there are now some very rich people

in Delhi who are doing really well, and yet you are still stuck here?

India's rulers face tough questions from India's voters during this

election season. I've come to the Finance Ministry, workplace of my

guest, Palaniappan Chidambaram, one of the longest serving and most

influential members of the Congress party. India has seen a decade of

economic growth. Yes, there is new wealth in this country. As India

squandered an opportunity to fundamentally transform its economy?

Palaniappan Chidambaram, welcome to HARDtalk. I want to quote some words

from last year in the Financial Times newspaper. India, they wrote,

has missed the kind of economic opportunity that comes along once in

an age. You acknowledge that missed opportunity? I don't agree with that

entirely. Some opportunities that may be missed, but some were denied

to us thanks to the global financial crisis. And the Eurozone crisis. If

these crises had not happened, we would not have slowed down to 5%. It

is not the fault of the global economy, is it, the government

deficit rising dangerously. Inflation going up sometimes to

10%. Many people suffering as a result. You can't blame all of that

on the global economy? The deficit reached the limit and inflation rise

because of the stimulus packages. Three in succession in December

2008. January and March also. They were a response to the financial

crisis of 2008. We acted according to the textbook. In hindsight, we

know that it had unintended consequences. The Indian people

don't buy it. The leader of the opinion polls of who is leading, he

calls the economic performance under your management, a debacle. What he

knows about economics can be printed on the back of a post at stamp. He

has said nothing about the deficit. Nothing about monetary policy. He is

in a learning process, and I am sure he'll learn very quickly. He might

regard that as patronising since the state he has run for a decade has

gone much better than the national Indian economy. Only in the last few

years. That's his record that he is running on. When India's economy was

booming and we have the golden period, his state was no better than

any other state. The leader of the BJP might quote back to you words

that you came out with end 2007 when he said growth at 9% means nothing

to a village who has no access to clean drinking water, no sanitation,

no school within ten kilometres of his village. You pledged to change

that reality. We have two a large measure. More people have roads than

before. More people have access to drinking water than before. More

children are in schools than before. There is no magic wand that can be

done in two years. You have had a decade of growth, which you crow

about in public. Crow is not the word. You are very proud of this.

Shouldn't we be? Why haven't you leveraged that growth into a

different reality for most Indians? You see the figures are good. I give

you some different figures. One third of Indians are living on or

below the poverty line. 40%... I want to stop you. One third are

below the poverty line. But in a five-year period, poverty has been

reduced by nine percentage points. The highest rate of reduction. It's

all comparison. We can go through energy and transport and compare

India with China. The inevitable comparison. On every single

indicator of infrastructure development and speed and delivery,

India is not just behind, but is so far behind that China is almost out

of sight. I disagree. Would you rather live in China under the

system, or under India in a democratic system? If I wanted

electricity or a road to get my child to school, if I wanted

healthcare, I would probably say a Chinese village. Unfortunately, I

don't think the people of India want to be ruled by a 1-party government

where they have no choice about their elected representatives and

don't have free speech, free expression, freedom. That is the

reality of India and Indian politics. Just to drill down to

specifics on failures, and I want your opinion. On electricity for

example, there was a promise delivered in fabric of 2005 to

electrified the whole of the country so that every household would have

electricity. There would not be shortages and blackouts. 2012, we

saw the infamous blackouts in this country. Still, we see that many

Indians in villages across this country do not have electricity. A

fundamentally flawed promise. That's true. It only a way of looking at

it. When we came office ten years ago, we had 110,000 megawatts

installed capacity. Today we have 211,000 megawatts installed

capacity. Far short of what you need.

This is a failure. Let us be honest about it. It is not failure. Would

you want me to give an answer rather than give in to failure? With all

short of our targets. There are environmental concerns. NGOs

protested against the terminal power plants, nuclear power plants and

hydro plants. People approached courts to stop projects. That is a

huge price we are playing for a system that we want and how. What

about priorities? In recent years, you spend so much of your time and

nation's money on subsidies and propping up the welfare system.

Rather than delivering the capital investment programme, the

infrastructure improvement we have discussed so far. We are a democracy

and the government has to respond to what the people want. Are you

suggesting the food subsidy is bad? The fertiliser subsidy is bad? There

is a huge demand from the people. There is something called

leadership. What leadership a few provided when you increase the

proportion of GDP to spend on subsidies? What kind of leadership

is that? Leadership is not to run over his aspirations or wishes or

desires of the people. Leadership in a democracy is different from

leadership in Avon democracy. India has done well in the macro greater

times. Or how has that changed India to make it a sustainable

21st-century economy? Most programmes are delivered on the

ground by state governments. To realise that the human indicators

are as good as any Western country. That is true. Do you realise that

the birthrate has fallen in a number of states to good levels? These are

things that education, health infrastructure, roads, schools,

these achievements cannot be wished away. If you look at other places,

there are far behind the national average. India is not one size fits

all. I got the message loud and clear. (CROSSTALK). One factor

denies all of India. That is corruption. Profound, endemic

corruption. To what extent do you think the corruption we have seen in

India, going back many years, have gotten worse under your

government's administration? I agree there is corruption. Is it worse? I

would not think so. (CROSSTALK). 92% believe corruption has gotten worse.

60% bought corruption in one country got worse. I do not think we should

go the polls. I am talking about 90%. Just because other countries

have problems, does not mean you can rest easy. Corruption has not become

worse. Corruption has been magnified. We are looking at policy

positions on which they can be debate as instances of corruption.

And since these have been magnified by some constitutional authorities,

there is a widespread perception that corruption has become worse.

They do not need magnifying. According to reputable sources, up

to 30% of lawmakers either are facing or have faced criminal

charges. Many of them are very serious. Is no different. It is

true, it is no from what we read in the economist or Time magazine or in

the Wall Street Journal about lawmakers in other countries. I

think it is. 40% of your lawmakers suspected or charged of criminality.

We have cases involving heads of governments and stays in other

countries. Do you want me to give you at least? These comparisons are

not relevant. I considered there is corruption in India. It is a problem

that has to be dealt with. In a speech not too long ago, corruption

was akin to the McCarthy witch-hunt in 1950s America. He said all kinds

of allegations are made but we are determined to rise above the noise.

All kinds of allegations are indeed made. (CROSSTALK). But the

allegations tend to be true. How many are known to be true? Where do

you want me to begin? Not me that Indians will tell you that so many

of these allegations are true that people do not have faith in the

public sector. Indians are 1.3 billion. 1.3 billion Indians do not

speak to anyone with one voice. With the public are given a chance to

vote, they tend to express deep disaffection with the status quo.

I'm thinking of the city, Delhi. There is a state assembly election.

Your party... The new ATP party is committed to cutting out government

and ending the corrupt practices, and they scored a famous victory.

You and your party might be sleepwalking into the -- in defeat.

(CROSSTALK). We might lose or win an election. That is not the issue

today. The Leader of the Opposition makes great play up on his humble

roots. He points out he was a key server. His family was very poor. He

said the Congress believe it is below their dignity to put the poor

person in a backward class. They feel it is insulting to fight

against those made for their work. Is that the election we face today?

The Congress party in its history, over 128 years, based of a long line

of leaders who have humble beginnings. -- boasts. Why does it

look like your party has lost touch? We have been in office for ten

years. There has been mistakes, successes, setbacks. People will do

it and decide whether they want to re-elect us or not. India is

changing. And the generation is rung up for him the name Gundy does not

mean as much as it used to. One leading historian said, the Chris

Maher of the Gandhi family is basically gone. -- charisma. A

younger group of voters do not remember the sacrifices, real or

imagined, of the antifamily. It that true? -- Gandhi family. To you think

travel Dundee will be the person who finds family name no longer works?

He is young. He is named the leader of the election campaign. He might

lead us to victory in 2014. Even if he doesn't, can you assert that he

will not lead us to victory in the next election? What India needs

leaders of the complete the capital in India and the most powerful

emerging economic nation, China. We have to find that set of leaders.

We have to fashion a set of policies that will close the gap, given the

difference in the two systems and therefore the difficulties of

decision-making compared to China. I have been saying this again and

again. You suggest -- your suggest -- your records suggest that were

not happen. That is not true. I was Finance Minister when we recorded

by% plus growth. If we grew at 1% for the remaining year thereafter,

we were close the gap with China. The and you didn't. We didn't and I

have told you why. Would you have the same conversation with the

Finance Minister of China? I would leave it there. Palaniappan

Chidambaram, thank you for being on HARDtalk.

It is another changeable day on the way, unpredictable. Further showers

on the way. In between the showers, some dry weather around. If you are

popping out for a lengthy period of time during