Friday, October 24, 2014

A New Vision for India

NEW DELHI – India’s Bharatiya Janata Party, led by Narendra Modi, has stormed into office, winning its first absolute majority and reducing the formerly dominant Congress party to a rump, with just 44 of 543 seats in the lower house. Although India’s sputtering economy was the dominant issue in the campaign, Modi’s victory implies a significant transformation ahead for India’s foreign policy as well. In short, an era of timidity and hesitation, bordering on paralysis, under the Congress-led United Progressive Alliance (UPA) has ended.

There is no shortage of external challenges facing India’s new government. Upon assuming office in 2004, the UPA frittered away the positive national-security and foreign-policy position that the previous BJP government had achieved, neglecting key partnerships as it struggled to work effectively in the face of chronic infighting.

For example, the Communist-led Left Front, part of the UPA, foiled the implementation of the momentous civil nuclear deal with the United States, and consistently undermined the creation of a balanced nuclear-liability bill. Indeed, that bill is still languishing – a situation that Modi should rectify soon.

With its decisive parliamentary majority (282 seats, plus another 50 or so held by its allies), the BJP has the mandate that Modi needs to pursue a bold and creative foreign-policy agenda. The question is whether he will use his political capital effectively to advance India’s interests.

Even while it adopts a more emphatic international posture, Modi’s government must guard against regression to non-aligned posturing and overzealous assertion of “strategic autonomy.” Instead, it must follow the global trend toward economic and security alliances.

Economic diplomacy will undoubtedly play a central role in Modi’s efforts. After all, India’s international prominence is based largely on its economic potential.

Among India’s top priorities should be measures to strengthen its relationships in its immediate neighborhood. Modi has already highlighted the imperative of making the South Asian Association for Regional Cooperation (SAARC) a “living body,” instead of the moribund group that it was under Congress.

To this end, the relevant parties must abandon the usual saber rattling, and implement confidence-building measures. This logic likely drove Modi’s decision to invite SAARC leaders – including Pakistan’s Nawaz Sharif – to witness his swearing in as Prime Minister. To build on this, Modi should work to expand intra-regional trade linkages and foster person-to-person connections.

Of course, economic cooperation and development will be impossible without sustained peace – and that will not be easy to achieve in a region beset by deep-rooted tensions, including between India and Pakistan, and the threat of state-sponsored terrorism. Making matters worse, India and China are locked in a longstanding border dispute. Add to that the turmoil in the nearby Middle East – exacerbated by America’s withdrawal from Iraq and Afghanistan – and India’s security situation is not immediately conducive to harmony and cooperation.

A more peaceful and prosperous future will demand a clear and credible strategic vision from Modi, including a zero tolerance approach to terrorists and their sponsors. At the same time, with the US retreating from the Middle East, India must take responsibility for the security of its interests in the region, such as by developing a blue-water naval capacity to secure its maritime energy-trade routes.

This imperative is one of the factors linking India and Japan. As many Indian strategists have noted, Japanese Prime Minister Shinzo Abe may embody the kind of self-confident and decisive leader that Modi aspires to become. Increased investment and defense cooperation with Japan will add much-needed substance to India’s “Look East” policy, which could be advanced further by implementing long-planned projects with Bangladesh, Myanmar, and Thailand, as well as by building road and maritime infrastructure and strengthening trade links.

Engagement with the Association of Southeast Asian Nations – something that the Congress government was always reluctant to pursue – must also become a priority, if only to ensure regional stability. India’s membership in the ASEAN+6-led Regional Comprehensive Economic Partnership was a step in the right direction, but much more needs to be done.

But India’s most important partnership remains that with the US. The problem is that former Prime Minister Manmohan Singh did not seem to recognize this, leading to a growing divide that has cost India dearly. And Modi’s relationship with the US has not been entirely positive, either, owing to American officials’ decision to deny him a visa following the deaths of many Muslims during riots a decade ago in Gujarat, where he was Chief Minister.

Given the bilateral relationship’s economic and strategic importance, Modi must reinvigorate ties, and quickly. For starters, he must work with the US to address commercial and economic issues, including American concerns over India’s weak intellectual-property protections and fears within India’s information-technology industry regarding proposed US immigration reform.

Success will require both sides’ patience and willingness to compromise, bolstered by confidence-building measures. For its part, India could initiate realistic tax reforms, like eliminating transfer-pricing and retroactive taxation.

Modi’s final foreign-policy challenge is Russia – another country that the Congress-led government neglected. Modi must now assess what kind of relationship can reasonably be expected with President Vladimir Putin’s increasingly assertive administration, while recognizing that it is not in India’s interests to have Putin view China as Russia’s only potential strategic partner in Asia.

One way to gauge India’s relationship with Russia – as well as with the US and even Israel – is to allow for increased foreign investment in domestic defense industries, including more co-production initiatives. Indeed, according to former US Under-Secretary of Defense Ashton Carter, stronger military cooperation and increased technology transfer is the most effective approach to deepening US-India ties. Why not adopt the same approach to strengthen India’s relationships with Germany, France, the United Kingdom, and Japan?

Modi undoubtedly faces major foreign-policy challenges. But, with a clear, confident vision and credibility-enhancing policies, he has a rare opportunity to put India firmly on the path toward peace and prosperity.

Read more from "Modi's Operandi"

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  1. CommentedRamesh Kumar Nanjundaiya

    Will Jaitley and Rajan have a smooth working relationship? Yes - but they will need more inputs from others as well. See my observation below. Top priority – take care of international rating agencies which are very closely watching the Indian Economy under the newly elected government
    The India growth story will come in differently this time. It is known that today foreign investors are bringing in fresh funds to the Indian market. Going forward this is going to prompt Indian investors as well to actively re-enter the mutual funds space and the stock markets with more vigor. As long as foreign funds are coming (I expect it should be about US$ 2 billion/month), the markets will start looking up. Today cash has started to come, which is a good sign. This will also help the banking industry to revive lending thereby giving rise to economic activities including infrastructure development, communication, agriculture, health sector, etc. All this could mean that the Modi euphoria has stated showing positive signs and feel good factor for the betterment of the country’s economy. The Modi’s Gujarat (pro business) model will slowly percolate on a pan India basis. Barack Obama is sending his representative next week to India to meet Modi to discuss “Business potential”. Having said all this, one of the top priority of the newly elected government should be to ensure that international rating agencies as Standard & Poor do not announce downgrading India's sovereign rating going forward. The best course to avoid this is to ensure that the country's fiscal deficit does not exceed 3.8%max (in the next 10 months). To achieve this would mean that inflation cannot be tamed now. Big task for RBI as well as Finance Ministry yes, but also Planning Commission, DEA. Ensuring a stable sovereign rating is a must to continue getting fresh investments into the country. More overseas investments coming in means, Rupee will become stronger going forward???........... we actually do not actually want a strong rupee now………..

  2. Commentedj. von Hettlingen

    As a former foreign minister, Mr. Jaswant Singh has eyes for India's foreign policies. He urges his partisan collegue, the new prime minister Narenda Modi to "pursue a bold and creative foreign-policy agenda". Indeed India will have to forge closer ties to Washington, if it wants to "work with the US to address commercial and economic issues". It serves India's interests to "strengthen its relationships in its immediate neighborhood". Japan has been reaching out to India and investing heavily in the country's infrastructure. The two may contemplate forming an alliance to support countries, that are embroiled in territorial disputes with China in the South China Sea. All these objectives are ambitious, yet Modi's "new vision for India" should be a domestic shake-up - good governance and effective public services.
    India is the only democracy in the world that knows a caste system. For centuries caste discrimination is the evil of all kinds of social evil. Those, who belong to the lower castes are disenfranchised. Nowadays politicians come only, when they ask for their votes during election time, but ignore their needs otherwise.
    A few days ago two low-caste girls in a remote village in Uttar Pradesh had been gang raped and were found hanging from a tree. The father reported the girls' missing after he heard from neighbours that the two had been accosted by a group of men. He was ridiculed by the local police for his low-caste status. The two girls had to relieve themselves in the open, because they had no access to basic sanitation indoor.
    Widened inequalities in an already unequal society see widespread poverty. Those who belong to the lower-rung of a group of castes are the underprivileged sections of the society. They are too poor to afford a toilet inside their homes. Women and girls are the most vulnerable to sexual violence when walking to and from open fields or public facilities. The series of gang rapes in India had shed a bad light on India's ability to protect its women - a paradox, given India is a self-proclaimed champion of democracy.
    Modi's election raised expectations, which are not easy to fulfil. Should he fail to deliver, disillusioned Indians would unseat him in five years. India's economy will not recover expeditiously, as it is a daunting task to improve public finances, to slash red tape, ease protectionist policies, boost infrastructure and create jobs. Putting the emphasis on education, health, water, energy and roads would invite foreigners to invest in India.
    Modi's election had raised expectations to incredibly high levels. Living up to these will not be easy. Idustrial production has declined in recent months and food inflation remains close to double digits. Foreign policies are important, but domestic affairs are even more!