Wednesday, February 11, 2015


Dr. Ramesh Grandhi sent us this insightful reflection on the recently concluded Republic Day visit by the US President. Enjoy.  

The visit of the POTUS and FLOTUS can be deemed an unqualified success. The bonhomie, the first name basis (Modi calling the POTUS, Barak), the pomp and splendor of the Republic day parade, the agreement on the contentious liability clause in the Nuclear deal and the stated desire to provide an impetus to increasing the bilateral trade by a multiple of 5—all these point out that the world’s biggest and most powerful democracies are finally getting their act together.

From PM Modi's earlier visit to the US

A cause for concern is how this new ‘strategic’ partnership will be viewed in China. It is no secret that the US wants to hem it in, make sure it never reaches a stage where it can compete with it for superpower status. All the talk of pivots involving India, Japan, Australia and countries like Vietnam which are suspicious of China’s intentions will naturally raise the hackles of the Chinese. While India has every right to decide on what strategic partners it wants to choose, it is the hope of every Indian that it does so without unnecessarily antagonizing our giant neighbor. That China is ruffled can be easily seen—Pakistan’s Army chief visiting it even while Obama was in India, and the Chinese calling Pakistan an All Weather friend and terming their relationship an irreversible one.

It is entirely possible that this is saber rattling Chinese style, and a planned move on its part to remind India that it too has options. The moot point here is whether China itself is to blame for the noticeable shift in India’s strategic thinking. Trying to encircle India by building ports in Pakistan, sending their submarines to the Bay of Bengal, and their submarines ‘visiting’ Sri Lanka, and also perhaps trying to wean away the island nation by ‘investing’ their billions there. That the recent loss of Rajapaksa was seen as a setback to them and a victory for India proves the point. More importantly, what might have moved the powers that be in India was the incursion by their army regulars even when their President, Xi Jinping, was visiting. This must have brought home to the Indians that being courteous and friendly with the Chinese would be taken as a sign of weakness, and perhaps even encourage them to take these needlessly aggressive steps. That this incursion ruined the atmospherics of Xi’s visit and led to the change in India’s perception of its strategic requirements is quite the possibility.

Coming back to the POTUS’s visit, the economic underpinning to it is for the average Indian like me much more important. The deals, in clean energy tech transfers and the stated desire to increase trade to $500 billion from the $100 billion now, have the potential to transform industry in India. With the PM’s stated desire to invest heavily in infrastructure projects, bullet trains, and attract FDI in a very big way—no wonder the stock market is booming and setting records on a daily basis. It was heartening to hear that India was the flavor of the meet in Davos, and the interest displayed by the CEOs of global conglomerates was music to the ears of all pro development folks.

With crude prices down to less than $50, our import bill will come down by several tens of billions of dollars, inflation too is down significantly, and if the economic ministries seize this opportunity in the coming budget and set the country on a growth path, it is possible that we can overtake China as the world’s fastest growing economy. One should remember that it was such sustained growth over the last 2 to 3 decades that has propelled China to its current dominant position, where it can sway global markets.

It would be every patriotic Indian’s dream come true if India manages to catch the bus this time around. What the policy makers should places special emphasis is on making certain that the growth is not a skewed one. Income disparities are already quite significant in India with a Gini coefficient of 0.669, and there is every chance that the top down model that might be adopted will skew this picture even more. Gleaming skyscrapers and Dharavi like slums might become prevalent and this is something we have to avoid under all circumstances.

Reading an article today on the riots in Soweto in South Africa was an eye opener. Rising income disparities will lead to a restive population, and this will lead to violence, looting, pillaging and crack downs. It is my fervent hope that a social welfare net is put into place to see that a majority of the population doesn’t feel left behind and envious. India has 16%+ of the world’s population but its share in the world’s wealth is a meager 4-5%, and that too taking the purchasing power parity into the equation. We have a long way to go, the light at the end of the tunnel is looking slightly brighter, I admit, but whether the growth will be an inclusive one or an exclusive one will need to be seen.

I would like to conclude by saying that if PM Modi does manage to bring to fruition his vision for India, India will remember him as the reincarnation of the Sardar!

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