How India Is Making Its Place in the World PART I
Author Alyssa Ayres discusses
her new book about India's evolving political and economic landscape.
India’s $2.6 trillion economy last year became the world’s sixth largest,
outstripping France, and with a projected GDP growth rate of between 7% and
7.5%, it could become the fifth largest, larger than that of the U.K. And yet,
while the country’s economic clout has been growing, it still has been unable
to secure permanent membership on the U.N. Security Council.
Alyssa Ayres, a senior
fellow for India, Pakistan and South Asia at the Council on Foreign Relations,
addresses these questions and more in her new book, Our Time Has Come: How India Is Making Its Place in the
World. She notes that India needs economic and political reforms, but these
are difficult to achieve — not just because of its democratic processes, but
also because consensus on reforms eludes the coalition governments cobbled
together by different political parties. Ayres shared her insights into India’s
evolving political and economic landscape on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111.
An edited transcript of the
conversation follows.
Knowledge@Wharton: India is, from all accounts, going to see incredible
growth in the years to come.
Alyssa Ayres: Yes. It has seen incredible growth also over the
past 25 to 28 years. There’s certainly a lot of potential – more upside – to
go. People in the business community see in India so much opportunity in the
momentum and the dynamism.
India has a lot of domestic challenges, so
oftentimes, when you have conversations about India outside of the business
space, people aren’t always able to look past its many challenges and domestic
vulnerabilities. So it is always a different kind of a dialogue to talk with
people who are focused on the real, tremendous potential that India still has
ahead of it.
Knowledge@Wharton: The title of your book, Our Time Has Come, I
believe is a quote from two prime ministers – Narendra Modi, the current prime
minister, and the previous prime minister, Manmohan Singh.
Ayres: That’s right.
Knowledge@Wharton: Do you agree with their view that India has now arrived
on the world stage? And if so, why?
Ayres: In many ways, India has arrived on the world stage.
[It] certainly [has] in terms of economic growth and the transformation that is
in process. I’m not saying [that transformation] is complete, [or that] India
has solved all of its domestic problems. But according to the International
Monetary Fund’s World Economic Outlook report of April 2018, India is now the world’s
sixth-largest economy, moving up from seventh largest. It has overtaken the
size of the economy of France. Some estimates suggest that India could overtake
the U.K. economy by the end of this calendar year. That would make India the
world’s fifth-largest economy. So we have to start thinking of India both as
one of the world’s major economies, even though it does have a lot of domestic
economic challenges at home.
In that sense, I do think that India has
arrived on the world stage. India continues to face a lot of challenges when it
comes to gaining access to the kinds of global institutions through which the
world carries out diplomacy, works on security challenges, and engages in
economic consultation. I devote some component of my book to this challenge of
global governance and India’s desire to have more access to those
conversations.
Knowledge@Wharton: How much of a role do you think India wants to have in
those conversations?
Ayres: Indian leaders have long sought for India to have a
seat at what people often call “the global high table” or “the seat at the
center of the world’s table.” India’s bid for permanent membership in the U.N.
Security Council is not new. India has for long made the argument of, “Hey,
we’re the world’s largest democracy. We’ve been on a consistent basis one of
the world’s top contributors to global peacekeeping. Why don’t we have that
seat at the table?”
We could also look at economic institutions,
like APEC – the Asia-Pacific Economic Cooperation forum. This is a grouping
that talks about ways to improve and promote free trade and investment. Well,
India is Asia’s third largest economy. It’s not a member. It’s had a membership
request going back more than 20 years. There have been no new members inducted
since a moratorium on membership for APEC ended in 2010. This is a real problem
for the legitimacy of APEC to have India on the outside.
By the way, this is the example I often give:
This year’s APEC summit host nation is Papua New Guinea. It’s wonderful that it
is a member and that it is upholding the principles of free trade and
investment. But this is a country with a GDP of about $20 billion. And India’s
GDP is growing — from $2.6 trillion dollars now, and is on track to
become a $3 trillion economy fairly soon.
It really raises questions about access to
those kinds of decision-making, consultative fora in which India could and
should be playing a leadership role – and one that it does seek.
Knowledge@Wharton: What do you think is holding back the access? What are
the barriers, and how can they be overcome?
Ayres: Some of these are just institutional inertia
problems. Certainly a U.N. Security Council reform will be very difficult. I
can’t sugar-coat that; any reform process will take years. It’s very difficult
to create a slate of candidates for expansion, and then there are issues in
terms of whether the Security Council permanent members should have a veto
power or not. All these questions remained unresolved. Nobody can agree on
those.
I should note that it is declared U.S. policy
to support Indian membership in a reformed and expanded U.N. Security Council.
President Obama made that declaration in a statement before the Indian
Parliament, when he visited in 2010. So this is not something the U.S. has
completely ignored, but I just don’t think that we have put our shoulder to the
wheel on the question of helping push ahead reform.
Knowledge@Wharton: Looking back to what you said a little bit earlier about
economic potential, there’s also a general election coming up in India next
year. Do you see any potential risks on the economic front that could sidetrack
the path that India is on? Do you see, for example, economic populism or
religious fundamentalism derailing the process of economic reform that has
allowed India to become financially so successful?
Ayres: This is always a risk with any major election,
because Indian elections are not won on declarations of economic reform, right?
That is not the platform that wins you votes. The platform that wins votes in
India is a platform that often offers free electricity and water and
irrigation. That’s the challenge.
Over the past year-and-a-half or so,
throughout successive state-level elections in India, there’s always an
election going on. In fact, there was just an election recently in a very large
state – Karnataka. We have seen a series of welfare announcements, or the
forgiveness of loans to farmers who, undeniably, are suffering. These are big,
complex domestic economic policy issues, to try to figure out how to provide
support in times of monsoon variability and challenges with crop yields and
such that are really important for people who do vote in large numbers.
But in the run-up to the [2019 general
elections], we’re not likely to see, for example, major economic reforms, the
type of which can help unleash greater Indian economic growth in the coming
years and decades.
Knowledge@Wharton: Do you think that the government of Narendra Modi and his
party, the BJP (Bhartiya Janata Party) will be vulnerable to a challenge from
Rahul Gandhi and the Congress Party, or perhaps a coalition of parties?
Ayres: It is hard to know what could emerge. The Karnataka
election results illustrate that the BJP in that state was not able to secure a
single-party majority…. The complexity of India’s political scenario with so
many different parties [is significant, especially with] the ability to have
both pre-poll as well as post-poll [alliances] or support from the outside to
form coalitions. I would be a fool to make a definitive prediction about what
might happen.
Knowledge@Wharton: Regardless of whether or not we make a prediction, what
will happen to India making its place in the world – if the BJP or the Congress
Party were to win, or if India were to go back to coalition politics?
Ayres: Let me answer that with two related but parallel
replies. The first aspect of that is ambition and direction – the trajectory of
foreign policy. I found it very interesting that when the Congress party held
its plenary meeting in March, it released a statement on foreign policy that
largely affirmed and agreed with the direction that the Modi government has
taken on foreign policy. It affirmed the notion of India now calling itself “a
leading power.” This is a new innovation of the Modi government, but it
positions India in the direction that the country’s previous leaders from
different parties have sought to see India placed on the world stage.
The idea that the Congress plenary would
affirm India’s foreign policy direction under the present government suggests
that there is a lot of consensus within India across parties that India does
deserve that place on the world stage.
The thing that I do worry about is the economic front. It
is so difficult to continue political reform and economic reform in India. It
was very difficult for the Modi government to get the Goods and Services Tax
through. This was a constitutional amendment – something that the previous
Congress-led UPA coalition government had attempted – but wasn’t able to get
through.
The Modi government tried to get
through labor law reforms, and tried
three times to issue ordinances on land acquisition reforms. All these would be
helpful to unleash the manufacturing sector. It’s difficult to get these things
done with a coalition government, where you’ve got disparate parties, not all
of which agree on the direction towards a more market-based economy. That poses
some significant challenges.
CONTINUES IN PART II
No comments:
Post a Comment