Prime Minister of India - Dr. Manmohan Singh

PM's address at the Dr. Jayawardena coloqium

"We have gathered here to celebrate the work and life of a remarkable human being that Lal Jayawardena was. Lal's career spans over 50 years. He and I got to know each other in Cambridge and I believe it was in the year 1955. At a seminar where he and I participated in the famous political economy club which was guided by Sir Dennis Robertson, the Marshall Professor of Cambridge, there was a discussion of what is economics about and Lal quoted to me something from Pigou's 'Economics of Welfare', a very famous book, he said that's the gist of what economics is about or should be about. Those words still ring in my ears. Quoting Pigou, Lal pointed out to me, when we study economics, our impulse is not the philosopher's impulse, not knowledge for the sake of knowledge but for bringing about an element of feeling directly or indirectly which will have perceptible impression on the quality of living of mass of people. Wonder, said Carlyle, is the beginning of philosophy, and in that very paragraph which Pigou quoted him, Pigou said in economics it is not wonder, but the social enthusiasm which revolts against the joylessness of withered lives and the solid base of the mean streaks which is the beginning of economic service. Lal as an economist remained a Keynesian throughout his life. I don't think he paid lot of attention to distributional aspects of processes of economic chain. But he has constantly reminded of those elements by his remarkable wife Kumari who unfortunately is not with us today.

The intellectual influence of Cambridge of Nicholas Kaldor in particular, and Sraffa and Mrs. Joan Robinson, I think remained firmly implanted in Lal's mind throughout. And as he grew, his wife contributed immensely to broaden his horizon to look at the social and distributional consequences of macro economic policy. I and Lal got very closely for some years in the beginning of UNCTAD and that was the age of hope where people generally believed that through international cooperation we could usher in a brave new world. UNCTAD was set up. Lal was one of the founding members of the staff of UNCTAD and I joined him shortly thereafter. And I recall the contribution that Lal and our other colleagues working in the Financial Policies Division of UNCTAD under a very distinguished British economist Sidney Dell, made to our understanding of how the international monetary and international financial system worked.

In the early 60's, there was a considerable discussion in the international financial community about what type of monetary system the world needs and that is the time when the idea of the new reserve assets as a substitute for dollar and gold came to be discussed and it was the signal contribution of this group under Sidney Dell which Lal was an outstanding member to bring home to the world that any new reserve asset, if it is to serve the purposes of contributing to world development, then the process of reserve creation cannot be limited only to a small number of countries. I think they convincingly showed that the new classical arguments that the developing countries need aid, long term resources but not reserves was fallacious. And out of that was born the first reform of the IMF Articles of Agreement on special drawing rights where new reserve assets was created which would be distributed to all the fund members, though of course, in proportions to their quotas in the IMF.

At the same time, there was a considerable discussion of what should be the process of reserves and development assistance and it is remarkable that the UNCTAD economists of those times under the guidance of Raul Prebisch made a very important contribution that the reserve assets has to be linked through accelerating flow of resources to developing countries. There was a very intensive discussion for the next 10 or 15 years about linking the SDR creations through the processes of development assistance. There was strong opposition. The established conventional wisdom was opposed to tinkering with the monetary quality of special drawing rights but indirectly, I do believe that, the thinking in UNCTAD did influence howsoever indirectly, what was going on in the world of international finance.

It was in discussion in UNCTAD among the members of this group that the idea of 0.7 per cent of development assistance was bought and I recall Dr. Prebisch once asking us that he did not believe that the target of one per cent aid which developed countries were being asked to give was operationally viable because it included both private flows and public flows. It did not specifically say what could Governments do for development. And he asked us can you suggest something and I think in Sidney Dell's presence, it was Lal, I believe, who suggested this 0.7 per cent target, the logic was simply at that time of the total flows to developing countries roughly 1/3rd were coming from private sources and 2/3 rd were coming from official sources. That is how, this 0.7 per cent target was bought.

Lal was a very ardent student and admirer of Lord Nicholas Kaldor and there was in those days the idea of commodity reserve currency. In this Lord Kaldor was greatly interested, also caught the imagination of Lal. And Lal produced a number of brilliant papers. Well, he did not succeed in convincing the world that the time would come to move towards a commodity reserve currency, but the discussions on link proposals, the universalization of access to SDRs, commodity reserve currencies did influence the thinking in the IMF, for example, out of the discussion from a group of 24 which came into existence largely because of the initiative of a small number of people of whom Lal was one, that this whole idea of using the IMF goal for development purposes was born. This idea was strongly opposed by orthodox wisdom in all parts of the world, but ultimately I think the Fund also came down and a part of gold was in fact used to finance legitimate activities by way of development assistance in the International Monetary Fund. I could go on I think about the contribution that Lal made in that period. I recall in 1963 the IMF had come up with a first report on compensatory financing facilities, the developing countries were not very happy with it and it was left to Lal and a group around him to work out what modifications could be made to the compensatory financing operations of the IMF.

At the same time, it was felt that there was a gap that development plans could be disrupted by influences emanating over which they had no control, the deterioration of terms of trade and other long term trends, cyclical and trend factor and in response to the resolution of first UNCTAD, the World Bank produced a report on supplementary financial measures, and I think Bimal Jalan is sitting here, when it came to be discussed in UNCTAD, on our side Lal and on the Bank side Bimal Jalan, made a very distinguished contribution even though nothing came out of those supplementary financing proposals. Well, Lal left the United Nations to work for his Government, he once again asked, when I got back from America, he invited me to visit him in Sri Lanka and I think there is still a paper in the archives of the Ministry of Planning in Sri Lanka where I wrote a paper of what we can do for India-Sri Lanka Economic Cooperation.

Lal remained throughout his life an ardent champion of intensive cooperation between India and Sri Lanka and a befitting tribute to his memory would be to strengthen cooperation between India and Sri Lanka in every possible way. Lal was also a committed South Asian and causes associated with SAARC and its associated activities were equally dear to him. So, I sincerely hope that the best tribute that we can pay to this remarkable individual that Lal Jayawardena was, to remain faithful to the ideas and ideals of cooperation not only between India and Sri Lanka, but that the countries of South Asia must find new pathways to work together to realize their common destinies, to make our countries free from the scourge of poverty, ignorance and disease that still afflicts millions and millions of citizens - men, women and children in all countries of South Asia. I join all of you in remembering Lal. I would not be mourning the loss, but the fact that here was a remarkable individual who did so much and I could go on with his human qualities but other people will probably be touching on that. In remembering him we honour a tradition, the concept that in human affairs ideas are as important as vested interests. Lal was par excellence an individual. He believed that ultimately the good was bound to prevail over evil. Along with Keynes, what he believed that ideas are in many ways more important than vested interests, whether it is true or not, I think one can differ, but I think all intellectual efforts are guided by at least that belief. And therefore, in remembering Lal, we pay homage to a remarkable human being, a great friend. A man like him will be missed for long long time to come. "