Panacea for India's problems

 

As the world has entered the third decade of 21st Century after the tumultuousness of 2020, the rollout of the vaccine has rekindled hopes in the minds of the people with optimism that the future will be better. But as we pause and look in retrospect of what has happened in the past decade, we are anything but hopeful. The condition of the Indian economy, which had been facing tailwinds from several quarters in the pre-pandemic years has gone from bad to worse with an expected permanent loss of as much as $20 trillion due to COVID-19, as per a report by Credit Suisse. On top of this, Indian borders are facing the heat of an assertive neighbour with no sign of thaw in the near future. So, what could be done in this scenario? What panacea do we need to solve these problems?

As a matter of fact, the problems related to economics need a calibrated approach with retrofitting at several places to get out of the fiscally-tight position faced by the government. With the budget in the offing, hopes are high that government could do better by assigning more credit support to pandemic induced poor through austerity measure and fiscally-crunched SMEs through credit supply and concessions while having a forward-looking vision for a fast-paced growth of the Indian economy and averting a, rather euphemistic, K-shaped growth. In a recent interview to Economic Times, Raghuram Rajan, ex-RBI Governor touts the idea of giving more leeway to States in spending their way to recovery and investing more on infrastructure to get out of this problem and concomitantly looking beyond stimulus measures for underlying structural issues facing the Indian economy. 

"Replacing the narrative of Aatmanirbhar Bharat (Self-reliant India) with Atma Vishwasi Bharat (Self-confident India) to ameliorate the discourse among foreign investors."

However, rather than getting more open vis-a-vis global markets, the idea of “Aatmanirbharta” is making rounds in the country. While seems to be a perfect narrative which might be able to strike the right chord with an emotional being and connecting him with the country’s clarion call to be self-reliant, this has raised eyebrows in the foreign markets over India’s inward turn. With the deluge of the world economy with inward turning or rather xenophobic output brewing among countries who were at the forefront of globalisation, the likes of the US and the UK, the narrative of Aatmanirbhar Bharat does everything but making investors sanguine. What is needed is an approach that helps India connect with global investors on a positive note and defenestrating our obsession with "Aatmanirbhar" industrial policy and recommiting to being a leader on new trade mechanism, as Mihir Swarup Sharma puts in his article.  In a recent article written by Rama Bijapurkar in the Indian Express, she called for replacing the narrative of “Aatmanirbhar Bharat” (Self-reliant India) with “Atma Vishwasi Bharat” (Self-confident Bharat) to ameliorate the discourse among foreign investors.

In the 5th Plenum of CPC’s central committee meeting, addressing the members, president Xi espoused the idea of “Dual-circulation” for the growth of the country in the future. He emphasised on the changing geo-economic realities of the world and encouraged to embark on the mission of shifting the tilt of the Chinese economy from global exports to domestic markets while retaining a hegemonistic position in global supply chains. It might look like an inward turn of China, but the way it was presented has assuaged the global investors in keeping faith over China at a time when global discourse against China has turned foul in recent years. Juxtaposing this with the recent deal between the EU and China on Investment, might corroborate the Chinese intention of openness. What are the learnings from this?

"India needs to be clever enough to take the economic advantage to be at par with the Chinese economy instead of getting stymied by its emotions to take forced decisions."

The above example teaches the need to learn and adapt as per the prevailing conditions while allaying the fears through choosing the narrative with caution and linking foreign policy with economic policy for developing a double-edged sword that might come handy in the future. Indian strategic and policy circles are failing while missing this node of how we can learn from China. We might be looking at the problem we have in the short-term while missing on some of the long-term benefits. The idea of not joining RCEP, rather seem alluring in the short-term, has some long-term serious ramifications for Indian geo-strategic and geo-economic interests, unless commensurate by individual free-trade agreements. In a webinar, Kishore Mahbubani, a Singaporean diplomat of Indian descent and author of Has China Won? The Chinese challenge to American primacy said that India needs to be cunning enough to take the economic advantage to be at par with the Chinese economy instead of getting stymied by its emotions to take forced decisions. 

While the idea of opening up and mending ways with China in concluding economic deals might seem self-deceiving, it is the other way round. It is the idea of making India economically strong because unless it is economically strong it cannot be militarily strong. Critics will say that there are other ways like making India self-reliant by developing national capacity or allying with the western countries for containing China, but the problem with these ideas is, neither do we have the technological and capital capacity to be self-reliant nor do we the bargaining power to make the ends meet in a western-led alliance on our terms. It is time to figure out what is more important, our short-term reticence instiagted by emotions or long-term benefits because the fact remains that our foreign policy is delineated from our economic policy and our vision is influenced by the emotions of Chinese incursions on the border areas.

While we may ponder over different dimensions of countering China, but the fact is China is too strong to be militarily defeated and too mighty to be economically bullied albeit having a weakling in the diplomatic route. The chance to have an edge lies in our diplomacy while linking it to our economy for a long-term vision of military modernization and building asymmetric warfare capability to counter China. For that, the western alliance will come handy to develop the military ties but that does not mean that opportunities that come to India could be neglected. It is high time to take reflective decisions on our policies thus far and to learn from the enemy we are facing on our borders and adapt because as Sun Tzu puts it, “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” 

India's options in the changing nature of the Gulf region

It was 3rd January 2020, when the US's drone struck the Baghdad International Airport killing one of the most coveted men of Iran, Kasim Soleimani, the commander of Iran Revolutionary Guards' Quds Force, which has created a splinter effect throughout the gulf region. Iran, which was facing the heat due to the collapse of JCPOA (Joint Comprehensive Plan Of Action), turned rogue against the US and in retaliation struck two Iraqi military facilities of the US, with no casualties. What started as minor bottlenecks from the Trump administration turned into brinkmanship that has infiltrated the Gulf region ushering in the new deals in the form of Abraham Accords between Israel and the UAE, Bahrain, Sudan and Morocco, providing a thaw to the long-held animosity between Israel and the gulf.

However, things are not as simple as they look. The recent killing of Iranian nuclear scientist Mohsen Farikhzade, allegedly by Israel, has turned the events to a point of no turning back. The recent legislation in the Iranian parliament regarding the breach of nuclear stockpile restrictions up to 20%, way up than what was agreed upon in JCPOA at 3.6%, has exacerbated the matters. Further, the feud happening in the Iranian politics between Ayatollah Khamenei supported by hard-liners and incumbent President Hassan Rouhani supported by moderates, with the looming elections to be held in mid-2021 has impeded the process of amelioration of ties with the US. 

Whilst all that is happening is worth noting, one thing which could set the trajectory of the Gulf either to moderation of ties or a situation on the brink of war, is the Abraham accords. Two things are worth considering when we talk about these accords. First, this accord has emerged as a clear anti-Iranian accord to capture the rise of Iran in the Gulf region and has nudged both Israel and the Gulf to clear out the differences. Second, this accord is a face-saving deal by the Saudis and the Emiratis due to their losing position in the Muslim world with the projected resurrection of Turkey, as a neo-ottoman empire, trying to project itself as the leader of the disintegrating Muslim world.

The Abraham accords are pushing the gulf to be the major flashpoint for years to come at a time when the world is facing challenges on various fronts from an archaic world order unable to contain an assertive China to the worldwide spread of a pandemic. With the changing scenario in the gulf, speculations are rife over what might be the stance of India in the future, which has welcomed the accords but concomitantly supported the Palestinian cause.

Whilst pondering over this issue is imperative for Indian policymakers, four things need to be taken into consideration before taking a major step ahead:

First, India is facing a catch-22 situation whereby it cannot backtrack from its long-held position on Palestine and ignore its traditional-ally Iran on the one hand while supporting the accords on the other. However, given the numbers of the diaspora (approx. 31 million) working in the Gulf region and India's burgeoning military and technological partnership with Israel, New Delhi has no other choice but to recalibrate its options and make some hard choices.

Second, whilst the hype over traditional ties with Iran looks alluring, the alleged coalition forming between China, Iran, Turkey and Pakistan, coupled with a belligerent China poses a threat to Indian interests in the gulf region. The recent incident of Chinese intelligence agents colluding with Pakistani agents and the Taliban, and Chinese meddling in Nepalese politics are some cases in point. New Delhi has two options either to defenestrate the accords and become vulnerable or to work in the direction of standing up for its interests.

Third, India's ailing economy which has been facing headwinds due to COVID is in a need of a major overhaul. Whilst the west and other regions are attractive players to invest in the Indian economy, the gulf countries which are in the need of diversifying their economic interests away from hydrocarbons sees India as a major market and destination to invest in. Juxtaposing these two scenarios of debilitating Indian economy and investment-willing Gulf, the salience of the gulf for India is an undeniable fact considering Indian needs.

Fourth, the gulf could be a partner for India in fighting against the problem of terrorism which have been hampering Indian interest for a long-time. Further, Israel and the gulf's partnership could be a major force for India in capturing the growing influence of radicalisation in the Indian subcontinent on the behest of few countries like Pakistan, while making it a more peaceful and amicable place.

Given the fact that there is a change of administration in the US which could become a major force for further turbulence in the region, things are becoming more alarming with the way they are proceeding. However, one thing which ought to remain constant is that India needs to be cognizant of its interests in the region and its steps should align with its interests on the ground even if it will have to make some hard choices or reposition some of its long-held ideas.