10-10-2012, 05:21 PM
India as a global power
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India is a potential world power.
India’s stable democratic political system,
huge middle-class population, immense military clout in South Asia, rising
economic fortunes and global ambitions make it a potential power that could play
a very important role in world affairs.
But it still must address numerous challenges. In order to become an
economic powerhouse, India must tackle several structural issues, such as reining
in the runaway fiscal deficit, freeing its manufacturing sector from antiquated
labour laws, selling state-owned assets and using the freed-up cash for investments
in physical infrastructure.
India’s relations with Pakistan, the US and China will be crucial. Peace
and stability will be critical in attracting and keeping foreign investment. If India
follows a pragmatic foreign policy and lets its economic priorities dictate foreign
policies, it will reap the dividends of peace.
India’s policies embody a blend of pragmatism and nationalism, and
its goals include both close relations with the US and recognition as one of the
leaders in a more multipolar world. India’s economic growth and ability to manage
its key diplomatic relationships will determine the size of the international role it
crafts over the next fifteen years. Its leaders’ skill in balancing the competing
objectives of its foreign policy will help shape the direction taken by both India
and the world.
Domestic transformations
A closer look at India’s economic growth
India’s first two transformations are domestic in character and
started with the economy. Deutsche Bank Research1 has examined
India’s economic record and prospects in some detail, forecasting
average real GDP growth of 6 per cent between 2006 and 2020,
expanding manufacturing and knowledge-based industries, and
population growth tapering to 1.3 per cent. Three other features of
India’s economic record in the past two decades are also important.
Differences among states: Growth in the states of India’s South
and West has decisively outstripped that in the North and East. In
Gujarat, the fastest growing state in India, the gross state product
(GSP) more than doubled between 1993 and 2003, and per capita
product increased by 73 per cent. In Uttar Pradesh, at the other end
of the spectrum, the increase in per capita product was only 13 per
cent during those same ten years. In India’s poorest state, Bihar, it
was “only” 22 per cent. In fiscal year 2001/2002, per capita product
in Gujarat was 3.8 times that in Bihar.
Political changes
The elections of May 2004 brought the Indian National Congress
back to power. The Congress Prime Minister relies on the support of
19 parties, drawn both from the ideological left and from a growing
array of single-state parties. The opposition, the Bharatiya Janata
Party (BJP), known for its strong nationalism, had led the two
preceding governments, a far cry from the meagre parliamentary
representation their predecessor parties enjoyed in the early years.
In the past 20 years, what had effectively been a one-party system
has become a complex contest between two and sometimes three
coalitions. The political parties that have steadily gained through the
past two decades are the single-state parties, taken together. They
have by definition no basis for unity, but their members have
become key coalition partners for both Congress and the BJP. The
BJP remains dedicated to its ideological core, especially when in
opposition, and the “left parties” remain dedicated to a broadly
Marxist approach, though their performance as the leaders of state
governments often pays little more than lip service to this ideology.
For the other parties, apart from a loose adherence to populism and
dedication to local causes, ideology has become largely irrelevant.
Military expansion
India changed from implicit to explicit nuclear weapons status with
its nuclear tests in 1998. The tests and the sanctions India faced
from most of the world’s industrialised countries had a modest effect
on India’s economy. They temporarily chilled India’s political
relations with much of the world, but in time most countries came to
accept that India would not relinquish its nuclear arsenal. Within
three weeks after India’s tests, Pakistan had tested as well.
In considering India’s domestic transformation, we also need to look
at the changes in India’s military posture. India’s nuclear doctrine
was based on “no first use”, and envisaged treating its nuclear
arsenal as a deterrent to nuclear threats. Its aim was to maintain a
“minimum credible deterrent”.