Author: Editorial Board, ANU
If there is a cliché that every observer of India strives — and usually fails — to avoid, it is Jawarhalal Nehru’s famous ‘tryst with destiny’. The phrase hints at the idea that India is too large and too populous to be a second-rank player in global affairs. India is entitled, as Minister of External Affairs S Jaishankar put it recently, ‘to weigh [its] own side’.
But the harsh reality is that since independence India has never really played in the top geopolitical leagues. Battered first by the bloodshed of partition, then weakened by decades of sub-par growth, its ambitions have always outstripped its means. The elevation of the Quad to leader-level talks holds the promise of a meatier leadership role in world affairs, but the events of this year, and in particular the dramatic deterioration in Western relations with Russia, a longstanding Indian ally, raise question marks over the exact role India might play.
India’s dream of joining the ranks of the major powers will depend crucially on its economic trajectory, which has always been the major constraint on its attaining great power status. Large poor countries can still make their presence felt, of course, but rapid and sustained economic growth is non-negotiable if India wants to upgrade its hard and soft power. For the welfare of its own population, too, India needs several decades of high, preferably double-digit, growth rates.
The task is hard, but maybe it’s within grasp. Just as the pro-business changes in the 1980s and the liberalising reforms of the 1990s showed that the so-called ‘Hindu rate of growth’ was by no means an Indian inevitability, the recent success of the country’s eastern neighbour Bangladesh shows that the export-led, labour-intensive road to prosperity pioneered by East Asia is available to South Asia, too, given the right policy settings. This kind of growth will enable India to join the ranks of the major powers — and become a valuable strategic counterweight to China as the influence of the United States in Asia wanes.
Governing democratic India is no easy task, but Prime Minister Narendra Modi is a highly skilled politician. Under his leadership, his party Bharatiya Janata Party (BJP) has expanded its appeal outside of its historic North Indian core of support, winning government in the Northeast states and taking seats in West Bengal. Though gains in the historically less favourable territory in the South have been less spectacular, the BJP is concertedly campaigning there too.
Modi’s re-election in 2024 seems for the moment likely — the other major party, the Indian National Congress, remains in a state of acute political and intellectual disarray — but not assured.
Recent state elections have shown generally good but mixed results for Modi’s coalition: in West Bengal, where the BJP was hoping to score an upset against longstanding Chief Minister Mamata Banerjee of the All-India Trinamool Congress, it made only limited gains; in Uttar Pradesh, the BJP-led government was seeking re-election and won, but with a reduced majority. There is still plenty of time before the next federal elections are due in May 2024 for Modi to make good on his reform promises before he faces the voters.
Modi’s defeat of a moribund Congress government in 2014 promised to move India past its reform lethargy. Eight years later, the scorecard of his government is still a work in progress. The first term of Modi’s government saw important liberalisation in foreign investment as well as the introduction of a streamlined value-added tax that helped simplify India’s archaic fiscal system. His second term has also seen liberalisation in investment and a corporate tax cut, but the labour, land and trade reforms that India needs to underwrite the next decade of rapid growth are incomplete.
A major blight on Modi’s record as prime minister has been his unwillingness to rein in his more extreme supporters on the Indian right, and his willingness to fan the flames of sectarianism when politically convenient. This may be politically expedient in the short term, but in addition to the humanitarian toll, pursuing it will damage India’s reputation in the eyes of its Muslim neighbours and the Western world. An India that cannot build effective strategic relationships in its own neighbourhood is unlikely to cut much strategic mustard elsewhere.
Another major blockage in India’s path to geopolitical pre-eminence is its lack of progress on regional trade integration. India’s refusal at the last minute to join the Regional Comprehensive Economic Partnership (RCEP), the world’s most consequential free trade and economic cooperation zone, was a strategic blunder and a missed economic opportunity. Giving RCEP the thumbs down may have cheered the nationalist, protectionist lobby within India, but the intellectual justifications for standing back from integration with the East Asian economy do not stack up.
Too many Indian policymakers are trapped within the mercantilist logic — though there is really no logic in it at all — of fretting about bilateral trade balances, an obsession which may have intuitive appeal to those who see trade as a zero-sum game but which makes no economic sense. It may be politically infeasible for New Delhi to reverse course on its RCEP disaster quickly, but India could show good faith by engaging wherever possible in RCEP’s cooperation agenda.
As decades of slow Indian growth in the 20th century demonstrate, there is no path to prosperity without openness. Signing shallow bilateral agreements with some western economies may seem like progress but won’t make India internationally competitive in the way that introducing East Asian and Chinese competition would.
Complicated though the politics are, the economics of India’s reform agenda are relatively simple. There is no need to fundamentally reinvent for South Asia a wheel that has been turning in East Asia for decades.
As Peter Drysdale and Charlie Barnes put it in this week’s lead article: ‘To entrench the global competitiveness of its manufacturing and service industries, India needs to cut its trade barriers and open itself to international competition. Increasing competitiveness and allowing cheaper imports of inputs will enable India to exploit its comparative advantage and develop a manufacturing sector capable of absorbing its growing labour force. Export-oriented manufacturing and services will draw migration from rural to urban areas, increasing productivity and gender equality and allowing for larger, more efficient provision of government services’.
India must get rich before it can become powerful, and — given the country’s current demographic make-up — there is an open window of opportunity in which the country can get rich before it gets old. The protectionist drift of policy in the wake of the COVID-19 pandemic — reflected in Modi’s new-found interest in Indian economic ‘self-reliance’, a phrase that harkens back to the bad old days of import substitution, must be reversed.
Perhaps for no other country in the world are the economic opportunities as large as they are in India, but the political will must measure up to the ambition.
The EAF Editorial Board is located in the Crawford School of Public Policy, College of Asia and the Pacific, The Australian National University.
The post Matching political will to geopolitical ambition in India first appeared on News JU.