The human mind has two distinct capabilities. They are (1) the capacity to acquire worldly skills, and (2) the capacity for Spiritual Discrimination. These two faculties are called Medha Shakti and Buddhi respectively. People do not have a clear idea of the difference between (worldly) cleverness and (spiritual) Wisdom, and often mistake Buddhi to mean cleverness. This is not correct.
Being exclusively related to the phenomenal world, Medha Shakti would help a person to be shrewd in worldly matters and achieve success in Society. However, this is no blessing. A clever man is restless, does not enjoy peace, and often goes through mental conflicts. He is a slave to his ego, which casts a veil over the Self and renders Buddhi ineffective. Cleverness is not an attribute of the Wise but unfortunately in this Kali age a clever person alone is regarded as great and accorded much respect.
Modern education lays great stress on the sharpening of the brain and can certainly help people to become clever. But it has no positive effect on Buddhi or the spiritual intellect. Our ancients, on the other hand, were unanimously of the view that Buddhi is superior to Medha Shakti, and is any day to be preferred.
Buddhi is essentially the combination of Shradda (earnestness), Sathyam (Truth) Yoga (power of control), and Maha Shakti (Divine Power). Shradda is the product of yearning and steadfastness. The Sathyam aspect implies a proper judgment and perspective, with Truth as the central focus. The third aspect Yoga connotes a mastery over the senses. One cannot speak of a person being with blessed with Buddhi, if he lacks sense and mind control. Shradda, Sathyam and Yoga together manifest as Maha Shakti, the power of the Divine. In short, all the aspects of Buddhi are verily Divine.
One should understand clearly the difference between Medha Shakti and Buddhi. Cleverness would help one in securing good grades in examinations, and in scoring victory in debates. It is associated exclusively with worldly skills. Buddhi, on the other hand, is spiritual in nature and close to the Atma. Thus, one must never confuse a Wise person (Buddhiman) with a clever person.
The hierarchical relationship of the various entities related to Medha Shakti and Buddhi is as follows: At the bottom of the totem pole is the physical plane. Above it are the senses; then comes the mind or Manas.
Buddhi comes above the mind and last of all is the Atma or the Self. Buddhi is thus just a "stone's throw" away from the Atma and is verily a reflection of the latter. It is thus the height of ignorance to equate Wisdom (Buddhi) with cleverness (Medha Shakti). The latter is associated to the senses and is thus intimately related to the phenomenal world. It promotes ego, and as long as ego dominates you cannot understand anything about the Self. A clever person would never be able to achieve Self-realizations; only a Wise person can.
Actually, this is very true but partial, meaning it is not a complete explanation of the realms of intelligence and spirituality.
To explain the importance of Buddhi, Sri Sathya Sai ji is using medha shakti and appealing TO one's medha shakti as a way of convincing man of this importance. What this means is a person cannot realize the importance of Buddhi without some level of medha shakti. In simpler terms this means that a man who has not moved beyond the grossest levels of existence (food, selfishness, body) to the level of manas, cannot realize the true value of spirituality.
Sathya Sai ji's explanation of the difference between mind intelligence and spiritual development is lacking in depth and clear distinction of what he means in spirituality. This can be easily demonstrated with a simple example. Take the development of a person and his relationship and view of God. There are levels of development in how a man will understand and relate to God.
level 1 - egotistic, pre-conventional
Man sees himself as God and as equal and powerful, but does not have any sense of anything greater than him.
level 2 - ethnocentric, conventional
Man goes from the gross level to first development of mind, realizes God is greater than any person including himself. At first his relationship to God is that of fear (if I'm not good, God will punish me), then it turns to that of severance (God will take care of everything no matter what). However here man thinks, only my God is real, all other Gods are false. Here most religions lie.
level 3 - worldcentric, conventional
Man moves from his own religious beliefs to acknowledge the world and all the religious beliefs that exist (high level intelligence). He realizes that God is beyond his own religious and community beliefs and sees God as embracing all humans. He develops care and compassion for all humans beyond himself and culture and now has a profound respect for embracing spirituality. All this is healthy... but the BAD side of all this is that man's highly capable mind can also take him through some other types of agonizing twists and turns. Here man sees religion as trapping and meaningless. He sees God as a construction of the mind (mistake). He now worships himself as God. Here man has reached the highest point of his ego and now where does he go?
level 4 - post-worldcentric, transconventional
Man breaks through the subtle layer of his ego. Sees God in himself and all life. Worships the God in everything and can rest in the emptiness in which all form (maya, samsara) emerges. Can sit at the seat of the infinite, seeing his mind as small form and therefore no longer gets lost in himself. Here man can balance form with Buddhi, realizing he can use his capacity for intelligence to work with form, whether it is in teaching, service or general philanthropy. In his actions, his career and work, there is always a thread of developing towards Buddhi and spiritual enlightenment.
Here you can see that the initial answer to level 1 and level 4 may sound the same, but the meaning behind them are different, and what makes them different is that development of intelligence. A man can be highly spiritual at any level of development, from level 1 to level 4 and up (5, 6, 7, 8). The more you develop the various aspects of yourself in both body and mind, the more likely you are to succeed in your spiritual path. What Sathya Sai ji tried to do was point out the dangerous aspects of level 3, but the problem is, you have to be at a healthy level 3 to even understand the value of Sathya Sai ji's words.
If we consider all this said above to be taken as true and an authentic explanation for why intelligence is needed to realize the importance of spirituality, then some interesting things come up. I had said initially that what Sathya Sai ji said was true but partial. Here are explanations that help give this a wholeness and completion that his explanation lacked. There are 3 different things we can mean when we say "spirituality" One is the highest ground of being, the level that all beings are striving for, attaining God-head Buddhi, nirvana, enlightenment (breaking the cycle, etc). The second is a type of development itself, like a skill. For example man can say he has practiced and developed his cooking but not his singing. Similarly, man can practice and develop a chosen path in spiritual practice and describe his level of development in spirituality. The last is the hardest to describe because it is that which binds us all and gives birth to us all. That spirituality is the Oneness of all, the ground of all, God himself, and that which is ALL. What Sathya Sai ji has done is thoroughly confused the first two types, forgetting that it is the development itself that makes man go from the second to realize the importance of the first and third.
To give more a more concrete example of what I am saying let us consider a personal quest towards spiritual bliss. This person has moved beyond his own body, and is trying to move beyond his mind and ego to the level of spiritual detachment. This man tries to achieve this through hours of meditation and silent sitting. Now the mistake this man will make is that in his quest for 'detachment' he will ignore his body's needs. How can this man achieve any sort of spiritual bliss and detachment (quickly or steadily) when he has allowed his physical body to become unhealthy and fat (deterioration)? If this man were to take a more comprehensive outlook (wholeness) on his spiritual development he would realize that ALL of his being is important and must be taken care of and developed. (His body is a temple for God so he must keep it healthy.) So perhaps this man will take up weight lifting and yoga to lose weight, gain some muscle strength so as to not tire easily and he will almost absolutely find a dramatic improvement in his mediation practice. He will find that he can focus better, sit longer and gain more from his hours of sitting by his addition of a healthy practice for his body.
As with the body, a man who is truly interested in spirituality will create a comprehensive practice that will do this for all aspect of himself. By creating a healthy practice for the body and mind, for the community and self, for family, and for healthy enjoyment of life one will find it effortless to sit in meditation or any other form of spiritual practice and therefore achieve Buddhi in a profound and beautiful way that would not have been possible before.