Friday 18 July 2014

Modi’s wisdom: Engage, don’t avoid (Pakistan Observer)

M D Nalapat

Friday, July 18, 2014 - Prime Minister Narendra Damodardas Modi is not a man in a hurry, nor is he wedded to short-term goals. Given that his party has a majority in the Lok Sabha (Lower House), he is clearly looking at at least a 60-month time horizon for his tasks,if not 120 months, on the assumption that the BJP will again prevail in the 2019 polls. Therefore, judging his record or predicting the future of his period in office by just the first two months would be wrong. Given his deliberative nature, it is likely that the contours of Team Modi will become clear only within the coming months, as he carefully chooses individuals to fill key positions in his administration.

The first two years will get expended largely in clearing away the debris caused by the decade of rule by the Sonia-Manmohan duo, a period that saw the replacement of the India Dream with the India Nightmare. A country which was once admired globally for its promise is now mocked for its abysmal safety record concerning women and a matchless penchant for missing opportunities. Low growth marches in step with high inflation, with the Reserve Bank of India refusing to accept that its policy of boosting interest rates has proved disastrous for the economy while being ineffective in holding back inflation. Private industry has lost confidence in the country, such that there is significant capital flight. Mafias control the prices of many staples of consumption, such as grains and vegetables, and in the financial industry, speculation based on insider trading has become the norm. It is going to be a difficult climb out of such a steep pit, and in between, it would be unrealistic to expect miracles.

Where Narendra Modi is expected to make a decisive change in a short time is in the improvement of relations with neighbours and friends. In the case of both Pakistan as well as China, the previous government largely followed a policy of keeping a distance. As a consequence, opportunities were missed. The fact is that in the case of both Pakistan and ( still more) with China, the opportunities for India as a consequence of engagement outweigh the risks inherent in outreach. The best policy would be to embrace the opportunities while securing the country against the risks to the extent possible. Given his practical bent of mind, this is what the new Prime Minister is likely to do.

In the case of Pakistan, should that country be in a situation where much prosperity comes from contact with India, and vice versa, the chances for military conflict would diminish. In the case of China as well, it would make sense to take advantage of the opportunities rather than avoid them out of fear of the risks of closer contact. An example is tourism. Out of 97 million Chinese who travelled abroad during the past year, less than 45,000 visited India, a minuscule number. Much of the problem relates to delays in getting a visa, and in poor infrastructure. Since the political situation changed in India, the Embassy of India in Beijing has significantly improved procedures, so much so that in all except a handful of cases, tourist or business visas take only 48 hours for processing, in place of the weeks which were the norm earlier.

And as for investment by China (again discouraged by the Sonia-Manmohan duo) ,it makes little sense to buy Chinese telecom and power equipment in the tens of billions of dollars while not allowing the companies concerned to set up production facilities in India. Given Modi’s pragmatism - something which comes naturally to the people of his home state, Gujarat - it is likely to be only a matter of a couple of years before large-scale Chinese investment begins to flow into India. Already, on June 30,the visit of Vice-President Hamid Ansari was utilised to sign an agreement for setting up Chinese Industrial Parks in locations across India, from Kerala in the south to Haryana in the north.

The countries of ASEAN are also likely to witness a fresh burst of engagement during the period in office of Prime Minister Modi. While China has put forward the idea of a Trans-Himalayan partnership as well as a revival of the Silk Road and the creation of a maritime Silk Road, India is likely to join in such plans, now that a government confider of the country’s capacities has taken office. Also, what is likely is that work is likely to accelerate on an India-ASEAN trade and transit treaty that world significantly enhance air, sea and land linkages between India and neighbours such as Indonesia, Thailand and Myanmar, besides of course Vietnam. An effort is also likely to improve the functioning of ports in India, so that shippers do not need to use Dubai, Colombo and even Singapore for transit of containers because facilities in India are so abysmal. All this will be very good news for a region hungry for growth, and which hosts a young population needing jobs. Connectivity is key to growth, and this has been a problem in India, including in the sphere of the internet, where browsing speeds in India are the slowest in Asia, and where less than a quarter of the population has access to the World Wide Web, unlike countries where almost the entire population is routinely online. Use of the internet can promote efficiency in the delivery of services as well as transparency in its operations, and a big push needs to be given to the sector. The indications are that the new PM accepts this as a priority.

Within India, railway speeds are to be increased through partnership with Japan in the operationalising of high speed trains (the first being between Ahmedabad and Mumbai) and with China in ensuring that existing trains run much faster and more efficiently. Countries in Asia need high rates of growth to escape poverty and to ensure stability in a period of rising populations. Such rates can only come about through engagement and not avoidance. This is a fact that is expected to drive policy in the administration of a PM whose mantra is growth through good governance rather than Big Government.

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