Retreating India

Centre's economic & political weakness hurts global standing

Back when the India growth story was unblemished and the ruling United Progressive Alliance (UPA) had emerged unscathed from the bruising nuclear deal confirmation and the elections that followed, there was an almost palpable sense that India had arrived as a major global player. It demanded as its right a larger share of responsibilities at international fora such as the International Monetary Fund (IMF) and the Group of Twenty. A united foreign policy establishment challenged growing Chinese influence in its neighbourhood. The “emerging power” narrative seemed irreversible. But, then, the India growth story seemed irreversible too. Now, as a prolonged period of growth at seven per cent or below becomes increasingly possible, and as the United Progressive Alliance’s (UPA’s) cohesion frays under the assault of regional parties with their own agenda, it may be time for a reality check.

The new equations are clearly visible in the current fracas over whether or not India should vote against the Sri Lankan government at a resolution before the United Nations Human Rights Council. Allegations of war crimes allegedly committed by the Sri Lankan army in the final stages of the country’s civil war have become a political issue in Tamil Nadu, and both major regional parties have taken strong positions. The Dravida Munnetra Kazhagam (DMK) is a large constituent of the UPA, but it has been weakened by a crushing loss in the Assembly elections and charges of corruption against its leaders. Nevertheless, it has reportedly bent Indian foreign policy in this matter to its will, even though many in the national security establishment worry about growing Chinese influence on the Sri Lankan government. This follows the episode in which the Trinamool Congress leader, Mamata Banerjee, derailed carefully-negotiated treaties with Bangladesh because she believed they posed a threat to West Bengal. The rise of the regions means that India increasingly has a confederal foreign policy, with all the weakness on the world stage that implies.

The slowing of India’s growth has two effects that enhance the impact of political enfeeblement. International investors are no longer sold on India; there is palpable disappointment at India’s wrong turns, which will communicate itself to their governments and to international bodies. Meanwhile, the fact that tax revenues are no longer buoyant means that the government is in a fiscal crisis. Defence outlays were increased in last week’s Budget, but the hefty increase in China’s defence spending announced at the recent meeting of the National People’s Congress in Beijing shows that India will continue to play in a much smaller league for a long time to come. Indigenous research and development in military matters are yet to take off properly; the Defence Research and Development Organisation has reportedly expressed unhappiness that the Budget has not provided it with the additional funding it was expecting. So cash-constrained is India’s government that the bill for the country’s increased voting rights at the IMF is a non-negligible proportion of the growth in government non-Plan capital outlay for next year. The days of the Emerging India slogan are past. Unless politics and economics take a sudden turn, India will have to be satisfied without a place at the global high table for a while.