Here is the full transcript of the interview:
Prannoy Roy: Good evening and welcome to this very special interview. It's for the British Prime Minister David Cameron. Just 43 years old, the youngest Prime Minister in 198 years. I am not going to ask him what he feels like mixing around with all of us in India, but he has just moved into 10 Downing Street from Notting Hill Gate or North Kenzington.
David Cameron: We had a family home in North Kenzington
Prannoy Roy: What's it like? What was the move like?
David Cameron: It's a big change because you are used to living at home with your family and then suddenly you are living above the office, so it is a big change and it doesn't feel like home, I hope I will get used to it.
Prannoy Roy: Did you do any fixture or fitting change, kitchen furniture?
David Cameron: So far hardly anything, there is number 10 Downing Street, there is number 11. We have started living above number 10 and we hope to move to number 11. We are making some changes to the flat because a new baby on the way.
Prannoy Roy: Yes ...yes?
David Cameron: So we need to make some preparation.
Prannoy Roy: So it's getting back to making a home again?
David Cameron: That's right ...that's right. It is only that you are very close to the office and you walk out of your front room and go down the stairs and suddenly everyone is working on computers... so it's a short trip to work but it makes it feel less like home if you are top of the office.
Prannoy Roy: Well you can get used to staying at 10 Downing Street because you are a young man and you are going to get re-elected.
David Cameron: Well, we've just had an election ...we didn't quite...my party didn't quite win an overall majority so we formed this coalition government which you are used to in India but it's very new for us. But it's working well and we have a good relationship and a good partnership and it means we have majorities in both our Upper House and Lower House. We are able to get things done and look at long term.
Prannoy Roy: Did you compromise a lot?
David Cameron: We had to make some compromises. Coalition involves compromise.
Prannoy Roy: One that hurt a bit?
David Cameron: There's some of the policy on tax and crime, something we had to change. But I'd like to think that we have a lot of conservative policies which we are producing, very important particularly in getting our deficit under control, getting our economy growing again and making Britain one of the most enterprising...making a change but making us an enterprising country again.
Prannoy Roy: There are two things I would like to focus on in this discussion - your whole thrust over change and this special relationship with India, which was in the Queen's speech and about which you wrote and spoke. So coming to this change you want to bring about...when your predecessor government came here, they made some fairly controversial statements about Kashmir which created bit of bad blood and negative attitude between the two countries. what's your stand on Kashmir?
David Cameron: Well, we want India and Pakistan to have good relations, to have good dialogue and to discuss and settle these issues.
Prannoy Roy: But you don't intend to mediate? You think this is India's issue?
David Cameron: I don't think Britain is in a great place to mediate on this issue and we welcome the fact that India and Pakistan have had more contact but it is for you to decide.
Prannoy Roy: So I would say that's the first change from what Miliband and Cook said. You call that a change?
David Cameron: Well I don't seek to draw a dividing line and a division. I will handle this relationship and the important issues in a way that I think is right. When I came to India, one of the first trips I made was to the leader of the opposition back in 2006, because I think there is a real opportunity for Britain and India to have to have a real strong partnership for the future. Of course, we have had this great relationship going in the past... we have shared history and language and culture, but it is the future I am interested in for our economies, what we can do together on so many global issues....climate change and security. We should be working together and I think that's what this opportunity is about and that's why although I have been Prime Minister only for few months, I wanted to come to India as fast as I could to make a case for this relationship.
Prannoy Roy: I will tell you another change which you just brought about. You you came to India because Obama first went to China then he is coming to India, Gorden Brown first went to China then came to India. You have come to India before China... is that part of the special relationship?
David Cameron: This relationship is special because of the history we share and what I hope we are going to do for the future but I don't think people should read too much into it....for a country like Britain it's not just India or China...you know we have to have a relationship with all countries. But with India, as we are two democracies... as we believe in the rule of law... well I have come and it is received positively.
Prannoy Roy: But you have come here first?
David Cameron: Right and also bringing with me, which I think is important, a plane full of not just business leaders but some of businesses' best leaders, also leaders of our top museum, great sporting stars, people involved in the cultural industry. Because I think this relationship is about business, but it is also about defence and security and culture and sport and it is also a relationship between the British people and the Indian people as well and the politicians and the diplomats.
Prannoy Roy: You know I have interviewed Gordon Brown two to three times...once I interviewed him and there was this huge scandal and was over-shadowed by the Shilpa Shetty episode in England...that was not the best time to come to India... but you have come at the time when these wikiLeaks have come out. I need to ask you about your Af-Pak policies because that affects us directly. You have said very clearly you will not deal with Taliban till they give up arms and violence right?
David Cameron: Yes, there are really three conditions - we want Taliban to give up weapons, we want them to divide themselves from Al-Qaida and we want them to accept the basic tenets of the Afghan constitution. But it is for Afghanistan to lead this process of political reconciliation and it is important . But it goes alongside the military surge... we are saying increase in the British troops and the American troops so we are protecting more of the people and providing more security to the people of Afghanistan and it goes together with the aid and the governance that we are delivering for that country to have progress and stability.
Prannoy Roy: As you know India is involved in aid and reconstruction... so when these wikiLeaks came out and showed that American and England are working with the Pakistan army and the ISI knowingly and these are forces which have helped the Taliban, the violence...how can you work with the force that helps violence and helps terrorism?
David Cameron: What we have to do in our relationship with Pakistan is to encourage Pakistan to go after the militants and the terrorists on their side of the border and to be fair to Pakistan they have made progress in arresting members of Al-Qaida and in pushing the terrorist from their side of the border. Do we want them to do more? Of course we do but we are going to solve this problem if we have good relationship with Pakistan as well as the work we are doing in Afghanistan. That is essential.
Prannoy Roy: You have been so forthright in your statements, apologizing to the people of Northern Ireland, your recent statement describing Gaza. Is there some regret that you can say, to people of India? Working with the ISI according to all these documents found, now admitted by US as well, working with ISI which has helped in bombing in Kabul, in the Indian embassy and helped in the Mumbai attacks... some regret?
David Cameron: First of all, I feel the deepest sympathy for the people in India and for the Government for the loss that you have suffered from terrorism. We too in Britain have suffered on the streets of London where terrorism in some cases, emanated from the same part of the world. And that is what I said today... it is unacceptable within Pakistan to support terrorism and terrorist groups elsewhere. We need to work with the Pakistan Government to make sure we close down all of the terrorism that exists from Pakistan... that is very clear and that is what our relationship is about.
Prannoy Roy: So what you are saying is that Pakistan is supporting terrorism and you want them to stop that?
Prannoy Roy: You are worried about the terrorism in the western part of the Pakistan but on the eastern side, where they have got camps, you have the same problem that we have been talking about for years... cross-border terrorism. But you are on the western side so are you also worried about the eastern side cross-border terrorism to India?
David Cameron: Of course, but we want to see a stable and democratic Pakistan, we want to see a stable and secure Afghanistan, we want to see over time a better relationship between India and Pakistan and it is all in our interest that there is better stability security and relationship in this part of the world and good for all of us throughout the world. But we don't see our relationship with India... this special relationship with India that I am talking about....we don't see that through the prism of the problems that come out of it.
Prannoy Roy: So you de-link?
David Cameron: I don't link those two. I see a relationship with India which is about our mutual corporation for our mutual advantage, whether that is business, whether that is trade, the cultural exchanges and relationship between our countries... that is a good thing in itself irrespective of any conversations we might have about a stable and secure Afghanistan.
Prannoy Roy: Now that you have raised economic issues, just to summarize, and if I am wrong please correct me, I am bound to exaggerate what you have said... one is that you would like to see Pakistan to do more within their country and two, Britain will not mediate or interfere in the Kashmir at all?
David Cameron: I have said on both these points very clearly what I want to see happen. Of course we want India and Pakistan to discuss issues between them and it is better for them. Absolutely!
Prannoy Roy: Between them?
David Cameron: In terms of terrorism, nothing happens within Pakistan that supports terrorism. And we will support the Pakistan Government in what they do to stop that and be fair to them. They too have suffered from terrorism themselves but we need to make sure that this work continues.
Prannoy Roy: No regret working with ISI one last time?
David Cameron: I have said what I have to say.
Prannoy Roy: Your brutal fiscal measures that you have taken, our Prime Minister went to the G-20 and said the risk of deflation is much higher today then the risks of inflation so don't contract too much now. But you and he seem to differ on that... you seem to have taken some really tough measures, deficit is 14 % of your GDP and it is pretty bad.
David Cameron: Not 14 % but 11%..but very serious.
Prannoy Roy: But you have stepped on the brake so hard those passengers are flying through the window?
David Cameron: I don't think that's the case and I don't think Dr Manmohan Singh, whom I respect as a very eminent economist as well as a very respected Prime Minister, a world leader... I don't think there is a deep disagreement here. At the G-20 what we discussed was that each country has to do what is right for its own circumstances and together that would contribute to global growth. So if in Britain you have 11 % budget deficit and elsewhere in Europe you have seen countries suffering with debt crisis. It is right to take action and action can actually increase the level of confidence in your economy but elsewhere we do need global imbalances that have built up where other countries have very large amount of current surpluses. We do need to see from those countries more domestic consumption and then dealing with those part of balances and that's part of how we get greater global growth.
Prannoy Roy: Do you think there is going to be double dip recession?
David Cameron: I very much hope not but the greatest threat to British economy is not dealing with deficit when you see what has happened with other European countries
Prannoy Roy: The greatest threat not dealing with it?
David Cameron: The threat is not dealing with it rather than dealing with it and let me make one point... the very act of dealing with the deficit means that you can have a loose monetary policy and keep interest rate lower for longer. And as you can see in the case of British economy, some of the market interest rates responded to what we did in terms of deficit and in the end that is the way of maintaining the demand is loose monetary policy and the second way is that we have better trade negotiations and more trade between our countries from which we all can gain and get great stimulus.
Prannoy Roy: One of the worries when you come talking about trade is that you are talking of the time when you are contracting and India is saying... look we are trying to expand and we are coming to your country and you have contracted? Not a best of the time to come?
David Cameron: It's infact a great time to come and invest in Britain because there is a strong and stable government dealing with one outstanding problem which is our deficit and it is great that so many Indian businesses, like for instance, Tatas have come and invested in Britain. If you look, we have now independent forecast and that independent forecast is for good growth this year and the year after...and for unemployment to fall that's an independent forecast, that's not me. It's a great time to come and invest in Britain... access to European market and English language that we share and we are cutting down our rate of co-operation tax to 24 % which will make us the lowest taxed countries in whole of the developed world. It is a great time to come and invest.
Prannoy Roy: I hope our Finance Minister is listening to you... 24% is not bad at all. Quickly, before we end on this topic of economy, it's a global world everybody is affected by what China does...do you also believe that China should change their exchange rates?
David Cameron: We want to see the imbalances in the world economy adjusted. I know that the Chinese don't react well to being told exactly how to... I think the world would benefit. Those countries with very big surpluses like China saw an increase in their own domestic consumption and if they took steps, and their own saving rates were not quite high as they were, then the imbalance in the world that was a cause of the problem of excessive borrowing in the West and excessive saving in China that was one of the causes and that was one of the problems that lead this great yield search, that leads to great boom in housing and stocks and everything else, we need to address the fundamental imbalances and the Chinese situation is part of that, we too must address our problem.
Prannoy Roy: Let me also add to that. If imbalances have to be changed then exchange rates can't be artificial because we have our market regulated.
David Cameron: My own view is that I support market exchange rate. In Britain we have decided to keep our currency pound and we haven't joined the euro and I believe in the inflexible exchange rates and that's my own personal view on how economy operates the best.
Prannoy Roy: You are a strong believer of the markets that is in your DNA, markets for goods, markets for services... what about markets for talent?
David Cameron: Yes I do believe in people being able to travel and for economy to benefit from...there is a great cross culture between British working in India and the Indian people working in Britain, but I do want to see some control on immigration. I know where that is going.
Prannoy Roy: No I don't think that's the old India where people want visas and all that...I think the free market in talent?
David Cameron: Yes there is market for talent but one of the problems that we had in last 10 years was that we had a lot of people coming to study, but who were studying in sort of bogus courses and bogus colleges, and it was really to come and work in the black economy rather than to study properly. So we must have an immigration policy that should try to capture some of the talent world so that people, the bright Indian students are coming to best Britain university...that's good for India... that's good for Britain but that does mean a proper immigration policy rather than a free for all.
Prannoy Roy: I have been told, and I know you are in a rush... this is one of the most hectic trips any Prime Minister has done... last question... I don't know whether to ask about Shah Rukh Khan or Kate Moss...let me ask you to tell us how you met Kate Moss.
David Cameron: I met her at a charity dinner and she lives in my constituency in Oxfordshire and we had terrible floods and so I said to her if she had any problems with floods, I would help. I would call the counsel and then I went back to table after that and said that the good news is that I met Kate Moss and the bad news is she thinks I am a builder or plumber rather than a Member of Parliament!
Prannoy Roy: The last question all the twitters have told me to ask you... the Kohinoor diamond are you going to return that ever?
David Cameron: That is a question I have been never been asked before... what tends to happen with these questions is that if you say yes to one, then you would suddenly find the British museum empty and I know there is a great argument about the original provinence of the Kohinoor diamonds, I am afraid to say it's going to stay where it's put.
Prannoy Roy: Well but we are going to keep trying. Thank you so much for spending time with us.
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