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 [...]

Sunday Times 2

Foreign policy: 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.

India's new Minister of External Affairs Sushma Swaraj arrives at the office of Indian Prime Minister Narendra Modi to attend the first cabinet meeting in New Delhi on Thursday. AFP

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 defence 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 recognise 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 recognising 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 defence industries, including more co-production initiatives. Indeed, according to former US Under-Secretary of Defence 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, Britain, 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.

(Jaswant Singh, a former Indian finance minister, foreign minister, and defense minister, is the author of Jinnah: India – Partition – Independence and India At Risk: Mistakes, Misconceptions And Misadventures Of Security Policy.)
Copyright: Project Syndicate, 2014. Exclusive to the Sunday Times

Headache for Modi as India posts 4.7% growth

NEW DELHI, May 31, (AFP) – India reported on Friday a second straight year of sub-five per cent growth, underscoring the challenges facing new right-wing Prime Minister Narendra Modi to revive Asia’s third-largest economy.
The economy grew by 4.7 per cent in the financial year to March 2014, below the 4.9 estimate of the previous left-leaning Congress booted out in elections earlier this month by voters angry over economic slowdown, soaring consumer inflation and widespread corruption.
“India’s economy is devoid of momentum as Modi takes charge,” said Capital Economics analyst Miguel Chanco.
The figures from the Central Statistical Office are “a reminder of the economic headwinds that will make a sudden shift” in economic performance unlikely, Chanco said.
The market consensus forecast for economic growth in the coming year to March 2015 is 5.3 per cent.
Growth has crumbled from nearly double-digit rates just three years ago — a level analysts say India must reach again to generate jobs for its vast young population.
The economy expanded by a decade low of 4.5 percent in the previous year.
“A lot of work needs to be done in the economy before growth can pick up again,” Nomura Asia interest strategist Vivek Rajpal said.
The economy grew by 4.6 percent in the final fourth quarter to March 31 from the same period a year earlier.
Persistent tightening of both monetary and fiscal policy to curb wage-eroding inflation has fuelled downward growth pressure.
In one piece of good news, India’s fiscal deficit for the last fiscal year was 4.5 percent of gross domestic product, slightly below an earlier official estimate of 4.6 percent, and down from the previous year’s 4.9 percent level.

Indians are looking to Modi, sworn in Monday as India’s premier and known for his fast decision-making during more than a dozen years as chief minister of prosperous western Gujarat state, to live up to his post election promise that the “good days are coming”.
Business leaders want Modi to dismantle an array of bureaucratic controls that have stalled more than $200 billion worth of investment projects, overhaul creaking infrastructure that impedes productivity, simplify tax levies and ease cumbersome land-buying rules.
Even if Modi proves to be the reformer that many hope, “the bureaucratic inefficiencies that make life so hard for businesses will not be swept away overnight”, said Capital Economics’ Chanco.
“The scale of the backlog of stalled investment projects will be a key yardstick of progress,” Chanco said.

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