Water is India`s greatest challenge: FM

While funds are being given to cities to help address their water problems, he doubts whether the Govt has a good national policy on water

Water poses the greatest challenge to India, according to Finance Minister P. Chidambaram. "We waste an enormous amount of water. That has to stop," he told the gathering at the opening of the World Economic Forum's 22nd India Economic Summit, on Monday in New Delhi. While funds are being given to cities to help address their water problems, he doubted whether the Government had a good national policy on water.

While Chidambaram called for greater investment in desalination plants to address shortages in coastal areas, other panelists called for policies to improve the nation's aquifers, modernize irrigation and discourage the growth of water-intensive crops in dry areas. Others suggested that new mechanisms need to be devised to make sure that water consumers bear the true cost of this vital resource. "India has earned the right to dream big in this arena," said Ralph R. Peterson, Chairman and CEO, CH2M HILL Companies, USA.

A range of imposing hurdles lie along India's path to development, including the need to transform its swelling population of young people into a skilled pool of labour and to prevent the scourge of AIDS from sapping their productivity, said Chidambaram. Yet, the very diversity of the Indian nation and the vigour of its democracy are potential wellsprings of the innovation needed to mitigate these risks and turn India into a world leader in solving such problems, he added. "Every risk is an opportunity for innovation and change," said the Finance Minister. "Risk gives the impetus to bring about technological change. Therefore, I would regard these risks not merely as risks but as opportunities to move ahead at a swifter pace."

Energy, and oil in particular, is another area in which India is particularly vulnerable, the panelists said. India is at least lucky, said Mohamed A. Alabbar, Chairman, Emaar Properties, United Arab Emirates, in that it lies within a pipeline of the world's most energy-rich region, the Middle East. But given the rising cost of energy imports, India cannot hesitate to pursue alternative forms of energy, the panelists said, and to reduce energy waste. "Our intensity of energy usage has to come down," said R. Seshasayee, Managing Director, Ashok Leyland.

But panelists also blamed speculation in oil for higher volatility in prices that discourage investment in alternative energy supplies. Chidambaram said high oil prices and high volatility are robbing India of at least 1% of economic growth a year. "The world must come to terms with this fact that oil-producing countries are exploiting the requirements of oil-consuming countries," he said, suggesting that the two sides work together to keep oil prices within a range of US$ 40 a barrel.

What India cannot accept, Chidambaram said, are demands of the West to curb its energy use in order to reduce global environmental damage, implying that it is hypocritical for developed countries to make such demands of developing nations. Instead, he said, Western nations should make sure that India and other developing countries have access to cleaner energy, environmentally friendly technologies and funding.

Still, panelists said the problem of how to ensure that India's growth does not come at the expense of the environment would require tackling the social dimension of growth. Nandan M. Nilekani, President, CEO and Managing Director, Infosys Technologies, stressed the need to shape India's urbanization in a more environmentally friendly way, while Seshasayee noted that protecting the environment would mean reducing the burden placed on it by the rural poor. "Poverty and environmental degradation are very closely linked," he said.

Improving education remains a priority for India. However, the Government has to ensure that it's growing population of young people become a demographic dividend and not a demographic liability. Seshasayee emphasized the need to reduce attrition in India's primary and secondary schools, while Nilekani recommended improving the quality of education in India's universities.

Fortunately for India, there is a growing willingness to address and discuss the country's problems with HIV and AIDS infection. The Government has publicly broached the topic, admitting that India has an HIV problem. But arresting the pandemic will require overcoming traditional taboos. "We have to be more open about sex," said Chidambaram.

India's growing income disparity is another long-term problem, but panelists were confident it would not translate into social unrest among its growing young population, saying the nation's often parlous democracy provided a palliative. "If you don't have democracy, there is a grave danger of social unrest," said Chidambaram. "But our democracy is a great pressure valve."

Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, concluded the opening plenary, saying "In today's complex world with enormous challenges and tremendous risks, you survive best by being in the driver's seat and not being driven. Our discussions at the India Economic Summit have shown us that India is definitely becoming more and more a master of its own destiny and a driver of global geo-economic and geo-political agendas."