"Modi's unrealistic American dreams", 'The Hindu', September 22, 2015
Modi’s unrealistic American dreams
There is at least one dimension in which the distance between Mr. Narendra Modi and Jawaharlal Nehru is not so great after all. I speak not of their fondness for the bandhgala but of their penchant for world travel. Not a day passes without our being informed of some impending travel by our prime minister. Right now we are bombarded by details of the itinerary of his visit to the US later this month. He will start, we’re told, with the annual meeting of the UN General Assembly and from there proceed to the West Coast. Nehru had undertaken this journey too, in 1949. But we were a different country then. Nehru had inherited a bloodily-partitioned nation with a declining per capita income. On the other hand, India is today one of the world’s fastest growing economies hoarding a young labour stock and a substantial talent pool, making the task of its leadership a little easier. While it must constantly engage with the rest of the world at all levels, the rest of the world does not hold the key to either the pace or inclusiveness of its economic growth. It is therefore altogether surprising that the leader of India should travel westward urging “Come make in India!” India is made to appear as a supplicant when no one asks it to be one. Nehru himself had travelled the world as the torch bearer, at the same time, of an ancient civilisation and a cosmopolitian internationalism with roots in the west to which he considered himself a natural heir. Till the 1990s, many an Indian abroad would have been the beneficiary of praise from African students and American workers for India’s role in hastening the process of decolonisation. It is not without significance that India had been the first port of call for Nelson Mandela after the end of apartheid in South Africa.
Before it comes to be imagined that Nehru’s forays into the wider world had amounted only to show-casing Indian attire we may want to remember that extraordinary financial inflows had been elicited then. Non-alignment brought with it an unexpected reward as the rival ideological blocks vied with one another to shower India with aid. Over a quarter of the total financing for the Second Five-Year Plan was via official aid from the rest of the world. Michal Kalecki, the astute Polish economist who was one among many intellectuals who had made a beeline for this quickening country, had remarked that India was akin to “the clever calf sucking milk from two cows!” It is also of interest that Nehru had shown no particular anxiety of wanting India as a permanent member of the UN Security Council, even as he championed thanklessly Communist China’s claims. It is not known what exactly he had thought of the prize itself, but it could not have escaped his attention that even when it was not a cabal of the rich and powerful it could hardly count as a democratic arrangement. Contrast this with India’s desperate attempts today to gain membership of this discredited club.
But of course the world has changed since the fifties. Apartheid and colonialism have vanished, and China is firmly entrenched in the Security Council, and with nary a thought for India’s inclusion. So one should not expect Mr. Modi to travel to the US with an anachronistic agenda. Yet one may expect him to be clear of what it will yield in relation to India’s current priorities. An argument is usually made out in terms of attracting foreign direct investment (FDI) and possibly technology to drive the Digital India programme. It is incontestable that both foreign investment and the spread of Information and Communication Technology are very important for India. In fact, every effort must be made to accelerate their adoption. However, on FDI, much of what can be achieved via enabling legislation has been. Further, the tariff barrier to trade has been rescinded along with quantitative controls. Foreign trade accounts for more than fifty percent of the Indian economy by now. But the promised gains in manufacturing are meagre, suggesting that domestic supply and demand conditions may be as important for Indian manufacturing as is an open trade regime. It is indeed correct that FDI has increased by over 100 percent in the past year, suggesting to some that this reflects a new international confidence in India’s economy. While the figure is impressive it is not unprecedented. FDI had increased by 100 percent in 2006-07 and by close to the same figure in 2011-12. In any case, FDI accounts for less than ten percent of total capital formation in the country. As for the IT tsars Mr. Modi is to meet in Silicon Valley, the US-based IT industry with its significant Indian presence has long ago sensed the profit opportunity in engaging with India that it does not need to be hand-held into the country. So it is likely to bide its time.
Altogether while the government is right to pursue foreign investment and technology it does gives the impression of not giving as much importance to other areas of the economy that require at least as much importance. Without suggesting what these areas are we might suggest that soon as the PM returns from abroad he goes on a virtual Bharat Darshan. He can even remain in the PMO while travelling backwards in a time-machine. What would be the things that he will get to see? He will find a farmer committing suicide in Hyderabad because he couldn’t afford medical care for his son. He will find that in Bihar, to which state he has promised special assistance of Rs. 1.25 lakh crores, the overwhelming majority of rural households do not have access to sanitation. In Delhi he will find a doctor of the AIIMS announce on television that dengue is “endemic” to its population, a grave diagnosis indeed. In Rajasthan, a state run by his party, he would find that a senior civil servant ran an extortion racket yielding four crores in ready rupees, taking the meaning of “ease of doing business” to an altogether new level. So, alighting from the time-machine he is likely to be struck by the thought that while Digital India is a worthwhile project it can only be a partial answer to what needs to be done in this vast and underdeveloped country.
The hardship of everyday life faced by Indians has a history far older than that of Mr. Modi’s prime ministership. It is the result of decades of misgovernance. Resolving them also involves a role for the states, where his writ hardly runs. But as the prime minister he is expected to show leadership in providing solutions to these problems. Minimally, he should draw attention to them, set-up bipartisan committees to proposed definite solutions, and suggest means of financing them. The role of the rest of the world, which looms large in Mr. Modi’s self-image it seems, in solving these problems faced by the people of India is somewhat limited. The technical element in the solutions is fully understood and entirely within our capability to handle. Even the financial constraints can be exercised by the exercise of political will. For instance, should the substantial public sector not be required to yield a much larger surplus than it does? And should a government plead with the well-off to give-up regressive consumption subsidies? Here, even Mr. Assaduddin Owaisi, with his niche presence in the political firmament, has shown greater statesmanship when he reportedly proposed that subsidies for pilgrimages, mostly undertaken by men, be diverted to educate the girl child.
Nevertheless, we wish our prime minister an enjoyable visit to the San Francisco Bay Area where a festival of ideas awaits him. He will find that though California is the home of the IT industry it also has a flourishing agriculture. He will find that it is a society where diversity is celebrated, as a result of which minorities bring their best to the table. He will find women, of Indian origin at that, in highest public office. And if he ever travels to the headquarters of the iconic Apple Computers he will find that it is headed by a gay man. Being a keen observer, he can hardly remain unaffected by these rich rewards of free thinking. In turn we await his safe return, hopefully rewired and ready, at last, to govern.
The author teaches economics at Ashoka University. The views expressed are personal.