India and the World
As we gradually move into the new year and plan where we will be relaxing at the end of December, George W. Bush is steadily preparing for his second term. China is forging ahead to be the prime power of Asia. After Beslan, Vladimir Putin is setting the stage for a more centralised, politically powerful and economically significant Russia. Continental Europe is economically floundering, with little or no sense of political unity. Amidst unparalleled violence, Iraq attempts an election in January 2005. Yasser Arafat is dead, with no succession plan in place. Iran and North Korea want to join the nuclear club. And nobody knows what Osama bin Laden will do next; indeed, General Pervez Musharraf has even gone as far as to say that Pakistan doesn’t even know where he is.
There is an alleged Chinese saying, “May you live in interesting times”. Today, it takes on even greater meaning.
Traditionally, most of us Indians are insular in our world views. This is partly due to the sheer size of country and its relative lack of integration with world markets. It is also cultural and, I suspect, arises out of a Brahminical epistemology, namely, “We are the font of all wisdom, and what we don’t know, we don’t need to know”. This position is no longer tenable. India is getting integrated, and it behoves of us to consider a deeper strategic and geopolitical view of the world. In this article, I shall try just that — to present some issues that we as a country should be thinking of as we engage a wider world. In doing so, I shall focus on the US, Europe, Russia and China. Thereafter, I will try to interpret the geopolitical changes in terms of what they may mean for India’s economic and political strategy.
The best place to begin is the US. For one, it is the most powerful nation in the world. For another, having won by a margin of over 3.5 million votes in what was the largest turnout in US elections, President Bush has, in his words, “earned some political capital” and he “intends to use it”.
Geopolitically, the big question is whether George W. will behave like a triumphal President who interprets his mandate to determinedly — almost unilaterally — put in place a new moral vision of the US in the global arena; or whether he will use his last four years in office to fashion a more inclusive, participatory and, therefore, more workable world order.
Some of the answers will come from the shape of his new cabinet. Colin Powell has been replaced by Condoleezza Rice as the Secretary of State. While it would be wrong to think of Condi Rice as an unmitigated hawk in the mould of Dick Cheney, Donald Rumsfeld or Paul Wolfowitz, she is undoubtedly far closer to a Bush vision of the world than her predecessor at Foggy Bottom. Bush is exceptionally close to Rice; and she has a very special bond with the President. This symbiotic relationship can cut both ways. On the positive side, one should expect far less friction between the State Department and the Oval Office; indeed, the State could easily serve as the extended administrative arm of White House’s views on foreign policy. The negative is that, faced with Bush’ preferences, Condi Rice may not be too keen on marshalling sufficient counterfactuals, especially in scenarios where such counter-evidences matter in developing more nuanced positions.
From India’s perspective, the loss of Richard Armitage is more significant. He was not only very familiar with the sub-continent but also more sympathetic to a secular country with a billion plus democracy over an Islamic military-led dictatorship. Given the extent to which South Block views our foreign policy with the US through the prism of Pakistan-US relations, Armitage’s demise is going to be an issue. As yet, we don’t know who his successor will be. Nor do we know what role will be played by ex-Ambassador Bob Blackwill in Bush’ second term. What we do know is that in the wake of General Musharraf’s seemingly successful recent visit to the US, we will have to work overtime to create a special niche for ourselves at the State Department, the National Security Council and the White House. In this, we will need all the help and advice that we can get from friends of India such as Blackwill or Richard Haas.
On the topic of creating special ties, it is fatal to downplay the role of personalities, their body languages and their energy levels. This is particularly true of the key people in the new Bush administration. Either they like you as a “regular guy” or they are suspicious of you irrespective of what you do. Here, it is well worth thinking whether Foreign Minister Natwar Singh has the personality to impress and create a bond of friendship with Condi Rice, her Deputy Secretary of State, the new NSA, or others in the White House. I could be totally wrong, but the impression I get of Natwar Singh is that he is a protocol-driven, hierarchy conscious, somewhat testy man, without sufficient charm and ease. If this is true, then it won’t go down too well in the new Washington dispensation, where it pays to be a “regular guy”. Equally, we need to think of whether our envoy Ronen Sen — a fine gentleman — will have the energy and drive to play the bridge-building role that Naresh Chandra did in the wake of our nuclear explosions. Chandra and Jaswant Singh spent huge amounts of political capital, personal charm and goodwill to rebuild ties after relations had hit rock bottom in June 1998. The phenomenal political, economic and strategic turnaround that one saw between then and pre-9/11 had much to do with their diplomatic initiatives, as it did with Strobe Talbott. I’ll come back to this issue in the last section of the article.
As it stands, it looks like Donald Rumsfeld will remain at the Pentagon for at least the next eighteen to twenty-four months, and so too will his key team. Dick Cheney, of course, will continue as Bush’ closest confidant and strategist.
Without Powell’s apparently more sobering influence, and with the State Department being in greater sync with the White House and the Pentagon, could we be seeing an even more Crusader-like Bush in Iraq? Somehow, I don’t think so. The last thing Bush wants is to have his armed forces stuck in Iraq for the next four years. Therefore, my guess is that his Iraq agenda will be as follows: first, ensure that the 30 January 2005 election happens on time; second, accelerate the process of training the Iraqi security forces — not to any US-certification, but to a base level of acceptability; third, announce a pull-out date which should be the end of 2005 or early 2006. End-2005 is better, for Bush can then say that he brought the men and women back for Christmas. All this won’t translate to an Iraq which can be a shining beacon of western democracy; but it will allow a planned disengagement, and permit the US to claim to have achieved all its pre-stated objectives. And if, five years down the line, Iraq gets balkanised between the Shias and the Sunnis, I suspect George W. won’t be too bothered.
The Iraq strategy may go for a toss if the insurgents significantly step up their offensive after Fallujah. The entire timetable can be pushed back and, worse still, the process of “democratisation” can be discredited if either the elections have to be postponed or are carried out amidst severe violence. The next thirty days will unveil how things go.
Iran and North Korea are trickier matters. Given its negative history with Iran, how does the US persuade a proud and largely self-sufficient country not to go ahead with its nuclear plans? How does it credibly convince an unpredictable, xenophobic dictator at Pyongyang not to play with enriched uranium? And what concessions can we expect these countries to extract in return? This is where the US badly needs the help from international allies: Russia vis-à-vis Iran, and China for North Korea. Therefore, how the US engages Putin and the Chinese high command will be a focus of global discussion and observation.
Regarding the US economy, the good news is that it is doing far better than Europe, and will continue in that vein over the next few years. Spurred by sustained productivity growth, US GDP increased by 3.7% in the third quarter of 2004, and it is expected to top 4% growth for the year. The non-farm unemployment rate has reduced to 5.4%, and the jobless growth that Senator John Kerry railed against seems a thing of the past. In fact, the economy has trotted along well enough for Alan Greenspan to raise the Fed rate by another 25 basis points to 2%— the fourth time in the year. GDP growth forecasts for 2005 are between 3.4% and 3.6%, which is a whole lot better than what is expected of the Euro Zone (1.9%) and Japan (2.1%).
The bad news is that the US trade and current account deficits are going out of control. The trade deficit stands at $611 billion, and the current account is going to be well over $630 billion in red, or over close to 6% of GDP. Simply put, the US imports way more than it exports. A recent study shows that for every 1% growth in US GDP the country’s import bill rises by 1.4%; and for every 1% growth in the rest of the world’s income, demand for US goods goes up by only 0.7%. This is a longer term structural phenomenon and it isn’t going to change in the foreseeable future, unless the dollar depreciates at an alarming rate. As a senior international central bank administrator put it to me recently, “The US trade and current account deficit is now in uncharted water.” Add to that the effects of Bush’ tax cuts carried out during his first administration — which has converted budget surpluses of the Clinton era to a deficit in the region of 5% of GDP. As of now, Bush has not yet come up with any plan to cut his federal budget deficit, leave aside trade and current account.
What does that mean for the dollar? Clearly, it will continue its downward course. Between January 2003 and early December 2004, the dollar has declined by 23% against the euro, almost 18% against the British pound, and almost 15% versus the yen. Even in India, where our Reserve Bank intervenes systematically to manage the exchange rate float, the dollar has fallen by over 8%.
Basically, the dollar survives because it is the currency of choice in most parts of the world, and because of trade and current account surplus countries of Asia seem to have an insatiable appetite to hold US currency, treasury bills and dollar-denominated bonds. But that can hardly prevent further depreciation of the dollar. According to experts, the dollar could slide up to another 20% against the euro and the pound, and probably an extra 15% against the yen. Somewhere down the line — probably towards the end of 2005 or early 2006 — the system will have to give. The dollar’s weakness is needlessly strengthening the euro and, in the process, creating further brakes on economic recovery. It’s the same for the yen. And China can’t go on accumulating phenomenal dollar reserves — over $515 billion at last count — without thinking of revaluing its renminbi. What will be the mechanics of the adjustment and its attendant political play are anybody’s guess. But an adjustment has to occur if the global currencies and capital markets are to function properly.
Most of Europe is in doldrums. This year, the Euro Zone (the fifteen nations that have the euro as their currency) will be lucky to achieve 1.8% GDP growth. Germany is the laggard of the flagging pack, with around 1.5% growth in 2004, and 10.7% unemployment; Italy isn’t doing well either, with 1.2% growth and over 8% unemployment. In 2005, the US is expected to grow at around 3.5%; China at about 8%, and India at around 7%. Contrast that Europe, which will be lucky to achieve 1.9%.
Not only does Europe under-perform, but it also creates dangers for its common currency. With the three major countries of the Euro Zone — Germany, France and Italy — continuing to breach their self-imposed fiscal deficit ceiling 2.5% of GDP for the second year in a row, it has become extremely difficult for Jean Claude Trichet, the President of the European Central Bank, to steer a sensible course for the euro. Matters are worse with the steadily depreciating US dollar. Moreover, in a milieu that favours 6-weeks paid annual holidays, labour market rigidities, high wages and an unsustainable social security and pension system, one can’t see how the mature economies of continental Europe can compete with either the US or Asia.
Then there is the issue of the ten new member states of the EU. With the Euro Zone reeling under 9% unemployment, western Europe will now witness a legalised influx of workers from the former Warsaw Pact countries to take up low wage jobs. This can create serious social and cultural strife in countries like Germany, Holland, France, Italy and Spain, which already have large unemployment. Labour migration arising out of enlargement can have one of two consequences. Either Europe will have to change its outdated labour laws and reduce its gargantuan social security benefits to create a more flexible and lower cost labour pool — that being the good outcome. Or it will induce the new members to adopt its own institutional rigidities. While the latter may assuage problems in the very short run, it will foster further lack of competitiveness over an even larger geography. I fear that the EU may well choose the second option.
Although Europe’s economic problems are bad enough, to me the key issue is political. With the EU having 25 member countries, Europe as a bureaucratic entity centred in Brussels does not know what it politically is, or what it should be. At a time when Europe should be playing a more active role in Iraq, Iran and the Middle East, and in re-developing its historically strong ties with the US, it finds itself devoid of a common foreign policy.
France’s President Jacques Chirac is a classic example. After acrimonious interactions with the US on Iraq, Chirac seems to have taken upon himself to fashion a French-led Europe which can be a counterpoint to the Bush-led US. That’s counterproductive on at least two counts. First, there are many European nations which want to rebuild bridges with the US, of which one can count Italy, Spain, Greece and, I dare say, Germany. Second, at a time when Europe needs France to be an integral part in resurrecting a solid trans-Atlantic alliance, Chirac can ill afford to play piqued. Today, Europe needs a credible political interlocutor with the US. It can’t be Tony Blair, who is seen to have ‘poodled’ himself in the eyes of continental Europe. It has to be either Chirac or Germany’s Schroeder — and the latter may not make the move if Chirac remains petulant towards Washington.
There is a largely western European myth about Russia that goes thus: with the right kind of economic and political incentives, Russia can be made to transit from being an essentially dictatorial nation to being a truly democratic entity with all the great institutions and liberal values of modern Europe. Nothing can be farther from the truth.
Russians love their culture, their literature, their language and their land. They also have a long-standing notion of their place in the sun, and a great affinity for a strong state. From the time of Peter the Great up to its defeat in the Russo-Japanese War in 1905, and then from Stalin till Leonid Brezhnev, Russia has always believed in — and acted out — its role as a European, a Central Asian and a world power. And from the Tsars to the Bolsheviks, Russia has never had anything to do with democratic traditions or institutions. Except for a brief fling with democracy of sorts during perestroika, it has steadfastly believed that sovereignty of the Motherland is contingent upon a strong, centralised state. Vladimir Putin, ex-KGB, is a product of these long-held notions.
After stamping his authority on the Chechens and in Beslan, and decisively showing Yukos Oil and Mikhail Khodorkovsky who is the boss, Putin has emerged stronger than ever before. Backed by sky-rocketing crude oil and commodity prices, Russia is doing exceptionally well. Its GDP growing at 7.4%; thanks to oil, it has a positive trade balance of over $78 billion; and it is has already accumulated almost $104 billion of foreign currency reserves. Putin is no longer the new leader wanting to be everything to everybody in the western world. He now considers himself the undisputed leader of a resurgent Russia — one who believes that he has the mandate to reengineer the country’s historical place in the world. Therefore, I would expect Putin to leverage the commodity boom to create a stronger economic base; to create a more centralised power hierarchy; and to insist on Russia playing a more active role in global politics, especially in Europe, Iran and the Middle-East. It will be wrong of Europe or the US to lecture Putin; and far better to actively engage him. I think the US understands this to some extent, but the EU doesn’t. Russia wants Europe; but doesn’t want to subsume itself to it. It wants to be Russia — somewhat European by convenience, but much more than it.
I love it when western economic commentators write on the Chinese economic slow-down. These are people who belong to countries which consider themselves enormously fortunate if they clock 3.5% GDP growth. Then they talk of a Chinese slow-down from 9.5% GDP growth to 8%. If I belonged to a country whose “slowed down” growth was 8%, I would be rocking all the way to the bank!
Here are some facts. According to the IMF, China’s GDP, measured in terms of purchasing power parity (PPP) was $6.5 trillion in 2003 — second only to that of the US at $11 trillion. As far as PPP goes, India doesn’t do too badly with a GDP of a bit under $3 trillion, or 46% of China’s. However, the great differentiator is the growth rate. In 1978, China’s GDP was 28% higher than India’s. Since then, China has grown at an average annual rate of 9.5%, versus 5.6% for India. Consequently, China’s national income today is 2.2 times that of India’s, and the gap is only increasing. In 1990, China’s share of world GDP growth (measured in PPP terms) was under 10 per cent. In 2003, it was 32 per cent. Almost a third of global income growth that one witnessed in 2003 was accounted for by China. Can you think of any greater index of economic power?
But let me give you more. Infrastructure is a case in point. Chinese politicians from Hu Jintao downwards realise that income inequalities have widened very rapidly between the eastern and southern seaboard versus the interior. They also understand that the greatest economic, social and political challenge facing the country is to generate rapid employment growth, especially for the poorer western provinces. Unlike many of our politicians, they realise that employment increases only with sustained economic growth, and are therefore putting in all the infrastructure and incentives needed to attract the maximum possible private sector investment in the interior.
Consider, for instances, Three Gorges, the world’s largest hydroelectric project on the River Yangtze. When completed in 2009 at an estimated cost of around $25 billion, it will produce 10 per cent of China’s electricity. But that’s not all. The country has embarked on a $60 billion project called “South Waters North”, which will use a system of dams, canals and pipelines to divert excess water from the flood-prone southern and south-eastern parts of China to the arid north and west.
The Chinese also realised more than half a decade ago that high import tariffs are inimical to the growth of manufacturing and infrastructure. In 1992 — roughly at a time when our industrialists were trying to form the protectionist “Bombay Club” — China’s average customs duty was 41%. Today, it is under 6%, which happens to be the lowest average tariff rate among all developing countries. Most infrastructure inputs are imported at zero duty.
More facts? China’s foreign exchange reserves are now close to $515 billion. In 2003, it attracted over $55 billion of FDI (while we got under $4.5 billion). This was after routinely mopping up an average of over $45 billion per year for the previous ten. In 2004, it is expected to garner another $65 billion. Joint ventures with foreign companies account for almost 30% of the value of China’s industrial products. At $851 billion, its trade in goods and services is about 8 times that of India — and that will grow at double digits. And it will be the world’s number one market for mobile phones, coal, steel, metals, television, personal computers, white goods, and agricultural and food products.
Don’t let the experts fool you. China isn’t going to have a terrible “hard landing” that is supposed to be the denouement of its economic “over-heating”. Chinese mandarins are too clever for that. Here’s what I think. China’s economic growth will slow down from a scorching 9.5% to somewhere between 8% and 8.5% for 2004 and 2005, which it will try to maintain right up to 2008. Thereafter, it will probably brake a bit further to the neighbourhood of 7.5% to 8%. It will gradually tighten interest rates and embark on significant financial sector reforms, but not at a pace that can harm overall economic and infrastructure growth.
Somewhere in the first half of 2005, in order to show the world that it is a responsible global economic power, China will create a 5% band for revaluing the renminbi. Naturally, the currency will immediately hit the ceiling of the band and remain there. If the experiment doesn’t hurt exports too much, it may consider another 5% band. But that’s about what one can realistically expect in the next year or so. I don’t see China suddenly letting the renminbi go for a free float to assuage the feelings of the US Secretary of Treasury.
Here’s the last piece of fact on China. By 2015, China’s GDP, measured at market exchange rates will overtake Japan’s. The best is yet to come, and one can’t even imagine the scale and speed at which it will arrive. And there is no doubt in my mind that China will be a major force in global geopolitics.
Do All These Mean for India?
After this high-speed resume of global trends, it is now time to think of what these imply for India. Let me try and summarise them in this section — first the economics and then, briefly, the global politics.
Thanks to the 8.2% GDP growth last year and a possible 6.5% growth this time around, India is again on the global radar screen. In part, it is because the global investing community has realised that an economy of over a billion people with growth rates above 6% is a space that it cannot ignore. In part, there is an appreciation that the global market game is China and India, instead of China versus India. It also reflects the desire of global majors to adopt a sensible geographical de-risking strategy — and India snugly fits into that scheme of things. Therefore, the present global economic constellation is quite favourable to us.
However, we can’t take that as a given and adopt an arrogant posture that I have witnessed earlier — “Nobody can afford to ignore India. They will line up on our terms.” I can think of several cabinet level ministers of this government, its predecessor and the United Front regime who regularly spouted such egocentric drivel. The Chinese are far ahead of us in almost every aspect of the game; and yet they want to whatever they can to attract more investments to their shores. As a friend of mine once said, “The Chinese always want to know; Indians always want to show that they know.”
We will have to use this opportunity to rapidly drive the second wave of reforms. In this context, it is worth noting that six months have passed with the new government being at the helm without there being any perceptible move towards faster reforms. Like many readers of this journal, I have huge faith in the reforming capabilities of Dr. Manmohan Singh. However, it is important to note that nothing terribly noteworthy has yet occurred — and the time to start moving is now.
To my mind, the primary focus has to be infrastructure. Consider the country’s highways programme, until a year ago touted as a success story. It is a fact that after the new government has come into power, the road programme has slowed down considerably. If my information is right, the Minister, Mr. T.R. Baalu wants to vet every substantive contract. According to official statistics, four- and six-laning of 3,294 kilometres of the 5,846 kilometres that comprise the Golden Quadrilateral (GQ) project has been completed; the remaining 2,552 kilometres are supposedly under implementation. What is the status of the 2,552 kilometres that are allegedly under implementation? What is happening to the contracts? Where exactly are the slippages? And what is the target date for Mr. Baalu to announce completion of the project?
The GQ needs to be quickly completed. More significantly, little has happened to the North-South-East-West project —7,274 kilometre long highways that will link Srinagar to Kanyakumari, and Silchar to Porbandar. Only 675 kilometres have been completed, with another 388 kilometres apparently under implementation.
It is now imperative that the Prime Minister’s Office resurrect this programme, give it even greater managerial impetus and accelerate the process of implementation. Clearly, this project needs the country’s utmost attention — and in India that can only happen if PMO decides to take ownership.
Now consider airports. Let’s forget about Singapore’s Changi, Dubai, Kuala Lumpur, Hong Kong or the Pudong Airport at Shanghai. Not a single Indian airport can light a candle to Bangkok’s. I think that the only reason why a disaster called Sahar Airport in Mumbai has not been erased from the face of the earth is that it makes Delhi’s Indira Gandhi Airport look very good in comparison. Almost twenty months have passed since we were told about the radical modernisation of Mumbai and Delhi airports — funds for which were allocated in the Union Budget. What has been done? Can we get a lack-of-progress report? Can we know the target dates to which the government will be committed? And when can we expect the new international airports at Bangalore and Hyderabad?
The less said about power the better. Today, there is at least a 9% shortfall between peak energy demand and supply. In a study of 1,856 manufacturing companies conducted by the World Bank where I was a principal researcher, we found that Indian firms lost up to 9% of their value of output due to power cuts. We also found that over 75% of the small and medium enterprises in India were forced to invest in generator sets to overcome power shortages.
With an infrastructure situation as poor as this, we cannot be expected to sustain the current international interest in India’s economy. Therefore, instead of wasting time having sterile policy debates about what to do with $15 billion of foreign currency reserves, the government ought to take upon itself the primary task of getting the road programme back to speed, to radically revamp Mumbai and Delhi airports, to give the green light for Bangalore and Hyderabad, to accelerate the process of modernising the main sea ports, to solve the Dabhol imbroglio, and to start measures to reform the power sector. The focus has to be on implementation.
Similarly with tariff and trade reforms. Irrespective of what industry lobbies say, we have to eschew the silly notion of “calibrated globalisation”. In the last four to five years, China has radically brought down tariffs without any detriment to industrial growth. We are beyond the state where we can think of a reduction of 5 percentage points at a time. En passant, it is worth noting that at 6% average tariff, the growth of industrial output in China in October 2004 was 15.7%; with an average tariff of around 17%, our growth has been 7.7%. This statistic, if nothing else, should make the case for an accelerated reduction of tariffs to Chinese levels by 2006.
One way of speeding tariff reforms is to consider more regional trade agreements within Asia. Purists like Professor Jagdish Bhagwati will see red at this suggestion. It is certainly true that in the best possible world, nothing can be better than a full-fledged multilateral approach to trade negotiations and reforms. But we aren’t in the first-best world. Led by the US, the world is being carved up into regional free trade zones. If India does not get into the act, it will be left out. We have made a fair beginning with Thailand and are now closing the deal with Singapore. I believe that in the next two to three years, we should move forward to having a free trade zone with all ASEAN countries, and plan for getting into a similar arrangement with China by 2008. If nothing else, it will force us to hasten trade and tariff reforms, and accelerate the pace of competitiveness of Indian industry.
Talking of trade negotiations, let me revert to the issue of body language. At the risk of offending many, I believe that our “success” at Doha and the “leadership role” that we played at Cancun has hoisted us on a hectoring petard. It is no secret that the US Trade Representative Bob Zoellick has been frequently exasperated by our negotiators, as has Pascal Lamy, his counterpart at the European Commission. To disagree and conduct tough negotiations is our birthright as it is everyone else’s. But to do so in a manner as if it we who are holding the moral authority of the developing world can be irritating. I think it is time for us to revalue what is in our best trading interests and actively engage in WTO negotiation — with some sensible “gives” for every major “take” — instead of trying to be the vanguard of a developing country movement. It is here that body languages will matter. And I hope that the Commerce Minister, Mr. Kamal Nath, will be seen to be charming, relaxed and accommodating, even as he bargains a hard line.
Geopolitically, we will have to spend a considerable amount of capital trying to figure out how to build even closer political ties with the US. Part of it can be through greater cooperation in trade negotiations. But it goes beyond that. We need to closely understand the global doctrines of the new Bush administration. Some of these will doubtless be difficult for us to accept. We don’t need to publicly reject them, but learn the art of smiling and keeping quiet. There will be many more areas where we will agree, and we need to continuously cement these agreements with decisive programmes and decisions. If we react to US foreign policy through the Pakistan-Kashmir prism, we will surely get unstuck. Thanks to Osama, Pakistan has become a valuable ally of the US. We can’t change that. Instead of getting hot under the collar with every little diplomatic coup that the clever general executes in Washington and Islamabad, we should widen the economic, political and strategic engagement with the US outside the sphere of Pakistan. Its easier said than done. But the good news is that we are gradually learning.
Economically, we need to accelerate our “Look East” policy and, in the process, bring China in the fold. Most ASEAN nations want India to play a more significant role, and we should be doing this with much greater vigour. In this, it is imperative to build significantly greater trade and investment ties with China. Today, the two-way trade is $10 billion. There is no reason why this shouldn’t triple over the next five to seven years.
Finally, the role that we can play on the world stage is wholly contingent on how well we do economically. If, over the next decade, we can make the necessary investments in infrastructure and embark on an accelerated path of reforms to attain an average GDP growth of 7.5% per year, then we will have signalled to the world the real arrival of India on the global map. Credible geopolitical play has little to do with the size of the country; it has everything to do with its economic power and concomitant influence. China has understood this well. India should realise it too. A billion strong economy with terrible roads, power cuts, horrible airports, poor ports and pervasively delaying babu-dom carries no clout in the new global order. Consistent growth does.
So, if we want to play such a role in geopolitics as we think is our manifest destiny, then we had better do all the reforms that give us the economic strength to play this political part. Or else, we can remain content at being the country of “perpetual promise and no delivery” — one that can always threaten to snatch defeat from the jaws of victory. The stage is set. The choice is ours.
Published: Seminar, December 2004