The sixth and latest edition of the Asia Thinker Series (ATS) by the Lee Kuan Yew School of Public Policy (LKYSPP) was held in Delhi on 30 November 2019. Titled ‘India as a Leading Asia Power: Opportunities and Challenges’, the session aimed to discuss challenges to India's economic and strategic aspirations, and how India's government can adapt its policy agenda.
Associate Professor in Practice James Crabtree, the moderator for this discussion, was joined by speakers Professor Danny Quah, Dean and Li Ka Shing Professor in Economics, Pradeep S. Mehta, Secretary General of CUTS International, Pramit Pal Chaudhuri, Foreign Editor of the Hindustan Times and Vineeta Hariharan, a public policy expert at the World Bank and an LKYSPP alumnus.
India’s changing foreign policy
The phrase “India as a leading power” became popular about a year after Prime Minister Narendra Modi was elected, when Foreign Secretary Jaishankar, during a lecture in Singapore, articulated that India had the aspiration to be “a leading power” rather than a balancing power in the world system, said Professor Crabtree.
In the aftermath of Modi’s election victory, India’s foreign policy has seen a much more assertive tone, and this has perhaps underlined the beginnings of a multipolar world order, added Professor Crabtree.
Indeed, this can be seen in the way India is building links with the Middle East, Singapore, and with other countries who are concerned about the rise of China. The rise of the ‘Indo-Pacific’ concept also speaks to the role India plays in Asia’s future, added Professor Crabtree.
The lesson gleaned from China’s rise from a middle to great power is that much of a country’s attractiveness in the international system comes from having a fast-growing, technologically innovative, reasonably open economy. To this end, India faces some major domestic development challenges. In addition, India’s leading power ambition will face an international environment marked by globalisation going in reverse to some degree and an unpredictable climate crisis.
India’s growth narrative and global headwinds
Prof Quah began by describing the traditional engine of growth – moving masses of people from low productivity agricultural activity to higher productivity, low skill manufacturing, setting the economy onto a trajectory of learning by employing a large fraction of the labour force.
Over in India, 50% of its labour force remains agricultural, but contribute less than 20% to the country’s GDP. To tell the story of India ascending to a leading power on the basis of its economic footprint, there needed to be a firmer narrative on the state of its economic bill, Prof Quah said.
Secondly, India is navigating a period of challenging global headwinds. Trade tensions between China and the US remain disruptive for countries globally, and are unlikely to be resolved satisfactorily soon. This unfavourable international environment hampers economies from leveraging on international trade. And India’s foreign policy narrative on strategic autonomy and flexible diplomacy fits well with the idea that other nations can carry forth their version of a multilateral system, distinct from a US-led world order, added Prof Quah. However, he stressed the importance of clear conversations about how India views its diplomatic relations.
Challenges in India’s government and World Bank
Ms Hariharan began by emphasising the much-overlooked third tier of governance in India – the local bodies – and their responsibilities to deliver basic services. Despite a huge transfer of funds to local bodies in the last 2 years, they have not been equipped to handle the human resources and fiscal autonomy required. In terms of governance, India should focus on the 90% of its local bodies which are rural – numbering 200,000 – and strengthen them to further deliver their responsibilities, she said.
She also highlighted the current infrastructure challenges faced by India’s government. The country faces a deficit of 8000 billion rupees in infrastructure needs, focusing on roads, transportation and the communication sector. The government is looking at private sector investments to plug the gap but faces reluctance from private sector to actively engage in public-private partnerships.
Ms Hariharan cited good examples of public-private partnerships with slum redevelopment efforts in Mumbai, but stressed that this has yet to be replicated in other parts of the country. The government also needed to focus on improving infrastructure on village and district roads, as well as other forms of transport such as inland waterways and shipping ports, she added.
Furthermore, the government has focused on the advancement of small medium enterprises (SMEs), and has mobilised several measures which promote ease of doing business. But while there has been momentum, some gaps remain in implementation of these policies and programmes on the ground, she said.
India: a chaotic democracy
Meanwhile, Mr Mehta from CUTS International agreed that on the geopolitical and economic front, “the pendulum is shifting from the west to the east… and this is affecting the geopolitical scenario in the world.” In earlier centuries, while India and China were historically the two biggest players in terms of GDP, China has claimed the lead for the way their governance system works. Unlike in India, Deng Xiaoping had a very clear vision for China when he launched his reforms in 1976, said Mr Mehta.
And while India is the world’s largest democracy today, it is a chaotic democracy and thus requires more effort to be able to reform, he added.
When India launched reforms in 1991, the government’s view was that the country could no longer continue to have a highly protectionist economy and continue liberalising in that particular manner.
Furthermore, the arrival of Narendra Modi in 2014 has changed the international scene, marking the first time in 30 years there was a single largest majority party in parliament.
However, the Indian government so far had not given much thought to the country’s trade policy or strategy, except to attract foreign direct investment in a maximalist way, commented Mr Mehta.
Mr Mehta also spoke on demonetisation and the implementation of the goods and services tax (GST), which has negatively affected businesses.
The state of India’s international relations
Mr Chaudhuri began by arguing that Modi’s “foreign policy on the regional level, was the focus on the small neighbours” such as Sri Lanka, Bangladesh, Nepal and to some degree Myanmar, who “either had indifferent or hostile relations with India”. One of Modi’s accomplishments was the turnaround in India’s previously-troubled relationship with Bangladesh.
There has also been more focus on regions west of India, such as the Gulf States and Africa. In recent years, the United Arab Emirates and Saudi Arabia have shifted their foreign policies and have aligned themselves on several issues. Over in Africa, India is now the third largest trading partner after the EU and China, Mr Chaudhuri added.
However, India’s weakness in trade diplomacy has been an issue for the country’s relations with ASEAN. ASEAN centrality is in question and on a “diplomatic and political military level ASEAN is seen as an entity that is not in great shape”. Meanwhile, Japan has emerged as one of India’s more strategic partners, “joining hands together in Bangladesh, Myanmar, Kenya and Southeast Asia working together where India will often lead diplomatically,” explained Mr Chaudhuri.
Another element of foreign policy Modi has navigated well has been the great power relationships, the trickiest of which being the Trump administration in the US. In China, Mr Chaudhuri feels there has been a “managerial approach on both sides” which has been the primary purpose of India’s China relations policy for the past two or three years.
Given the changing nature of geopolitics in the world, marked by the decline of the US, India has adjusted accordingly, and has been able to leverage its economic size, military capabilities, and geography in a reasonably sound manner. “No major foreign policy disasters, no major failures, and quite a number of big successes,” Mr Chaudhuri concluded.