 "U.S. Democratic presidential nominee Hillary Clinton greets audience members at a campaign rally in Cedar Rapids, Iowa")
From being the clear favourite to be the next American president, Hillary Clinton is now almost at par with Republican candidate Donald Trump in various polls predicting the next American president. Clinton has big shoes to fill. The only time when a Democrat managed to achieve what Clinton is striving to for her party was between 1931 to 1944. Franklin Roosevelt won four consecutive terms as president for the democrats and died in the first year of his fourth term. Clinton’s ability to take forward Barack Obama’s two term legacy is not just challenged by history but also an opponent who cares little about what the world thinks of him. A majority of polls still show Clinton in lead, but the odds have heavily tilted in Trump’s favour. Despite that, Clinton remains the favourite to be the next American president.
Unlike Trump who has a fixed 15-point agenda, Hillary has divided her agenda into 41 issues. And unlike Trump, Clinton’s agenda has a more socialist tinge to it. Clinton has travelled to India as the first lady and the secretary of state. The Clinton Foundation does extensive work in villages across India. If Clinton as the next American president were to come true on her promises made during her election campaign, it could impact India in several ways. Here are some of the issues in her agenda and how they could impact India if Clinton were to walk the talk on her pre-election promises.
1) Tax crackdown on American corporations: Many American corporations thrive by operating in a grey area between what is legal and illegal to avoid taxes and increase profits. Clinton has promised to crack down on companies that make profits in the U.S and shift profits abroad to avoid paying domestic taxes. She has also promised to implement the ‘Bufffet rule’ that calls for taxing those earning more than $1 million a year at minimum tax rate of 30%.
For those millionaires looking to exit America after these conditions are imposed, Clinton has also planned an exit tax. While India, given its low standard of living is rarely on the list of millionaire Americans looking for a second home, India also cannot hope to attract American corporations deciding to exit the U.S to avoid Clinton’s crackdown. That’s because in 2015, both India and US signed the Foreign Account Tax Compliance Act popularly called FATCA. Under FATCA, American corporations making profits in India will have to report their Indian financial accounts to U.S which makes them susceptible to tax demands in America. If American corporations fail to do so, the Indian government is obliged to share the information with the U.S. This has made India, along with other nations with whom the US has signed FATCA, unattractive for companies looking to avoid the kind of situation Clinton intends to put them in if elected President.
2) The ‘Make It In America’ plan: Clinton’s Make In America plan, like PM Modi’s Make In India plan, is driven by focused spending on the manufacturing sector. But a closer look at Clinton’s plan shows that a principal component of this objective would be achieved by the imposition of anti-dumping duties on China. Like Trump, Hillary too has labelled Chinese trade practices as unfair and has specifically promised to prevent China from dumping cheap steel products in the US.
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That would be bad news for the Indian economy whose domestic manufacturers have been severely hit by the glut of Chinese steel. If Clinton were to permanently restrict the import of Chinese steel to prop up American manufacturing, more of it would be diverted towards India. That’s because steel comprises the main component of primary product manufacturing and India’s growing economy needs more of it. Indian measures to restrict cheap Chinese steel are also short term in nature. India has imposed an anti-dumping duty between $499 to $538 per tonne on some Chinese steel products. But these duties are only for a period of six months. If Clinton was to go ahead with her Make In America plan, Indian steel manufacturers could be in for more hard times unless the Indian government intervenes with more anti-dumping measures. That could lead to complications in bilateral relations with the Chinese.
3) Tackling an impending ISIS surge in Afghanistan: Unlike Trump, Clinton clearly understands that the threat of ISIS expanding in Afghanistan is an impending catastrophe in the making. Clinton, a seasoned foreign policy hand, has clearly mentioned in her election campaign that she would target ISIS affiliates not just in their Syrian and Libyan strongholds but also in Afghanistan. This would be comforting for the Modi administration which is increasingly dealing with the threat of ISIS propaganda spreading in India. ISIS flags have been raised in Kashmir and home grown terror outfits are increasingly looking to ISIS for inspiration. If Clinton decides to carry forward with her plans to tackle ISIS influence in Afghanistan, it would indirectly benefit India.
On the flip side, India would be well aware of the repercussions of the Bush era intervention of the U.S in Afghanistan. The U.S war in Afghanistan had choked access of opium to lucrative western markets and pushed more of it into India. The result of that was a ballooning of the drug crisis in the state of Punjab.
4) Plan to cut America’s oil addiction: Clinton during her campaign has clearly said that she wants to wean America away from fossil fuels. Her plan involves cutting America’s oil consumption by a third by investing more in solar power. Hillary has no plans of exploiting America’s 3.7 trillion barrels worth of reserves of shale oil. India was hoping that with a greater exploitation of America’s vast shale resources, it could wean itself away from its dependence of Oil and Petroleum Exporting Countries (OPEC).
If Clinton were to be President, the power of dictating global oil prices would continue to be with the OPEC. Clinton has also promised to take completely make certain areas in the U.S a no go zone for oil companies. If she follows through with this promise after being elected president, America’s shale oil reserves would continue to be under-exploited even though it has potential of lifting millions of people out of poverty across the world. That would also be bad news for Indian oil companies which were looking to tie up with American companies for a share of the extraction business once more reserves are available for exploitation.
5) Raising the minimum wage: One of the highlights of Clinton’s campaign is her plan to increase minimum wage and her promise to eliminate tipped minimum wage. While tipped minimum don’t affect Indian IT companies much, minimum wages certainly do. Indian IT companies thrive on getting low cost Indian labour to work in the U.S through the H1B visa programme. Most of these workers are paid the minimum wage or a little more than that in a bid to boost profitability.
For most Indian workers, a minimum wage in America is way more than a high pay package back home. If Clinton were to raise the bar, Indian IT companies could see a major cost escalation owing to enhanced salary outgoes in their American operations. This could lead to redundancies or reduced hiring by IT companies back in India. On the brighter side, Clinton hasn’t clearly specified the rate at which the minimum wage would be increased. The argument of skilled Americans losing jobs to Indians has been invoked by both Democrats and Republicans in the past. Indian IT companies could take solace in the fact that these promises are often forgotten after the elections are over.
6) Free education for all: Clinton has promised to provide free graduate college education to all families earning less than $85,000 a year as soon as she is elected president. She has promised to make graduate education free to students from families earning up to $125,000 a year from 2021. Additionally, she has also vowed to make all community colleges tuition free. This could be good news for thousands of Indian students who often take huge loans to fund that coveted American degree.
Although American colleges provide generous scholarships to deserving Indian students, a majority of them still have to rely on bank loans. With many Indian banks unwilling to give education loans without a collateral many Indian students flock to countries like Germany where public education is free for everyone. Taking a loan for an American education often involves mortgaging the family house in India for the purpose. Most Indians still bank on a house as their only fixed asset. But Clinton hasn’t yet specified whether international students would also be eligible for debt free education that she plans to usher in if elected the next president. Moreover, Clinton hasn’t yet made her stand clear on higher education. More than 1,32,000 India students from India were admitted in US universities in a masters or research programmes. If Clinton implements her promise, more Indians could head to the U.S for pursuing bachelor degrees rather than a masters.
7) Setting a precedent on tackling corporate crimes: Clinton has been more vocal than Trump when talking about corporate crimes. Her slogan “Wall Street must work for Main Street” has caught the fancy of voters. Clinton has promised to extend the statute of limitations to prosecute financial frauds in addition to holding executives responsible for corporate wrong-doing. This could involve criminal prosecution rather than just imposing fines which corporations treat as a cost of doing business.
If Clinton comes good on this promise it could put more pressure on the Modi government in India which is perceived as pandering to the interests of large corporate groups. According to data published by TRAC, the number of white collar crime prosecutions in the U.S in 2015 was just above 5000 cases. Not all of these pertained to big corporates. In India, while the police are untrained to investigate complex economic crimes, investigative agencies too have found themselves under pressure while probing fraud by big corporate houses. If Clinton were to come down hard on corporate misdemeanors as promised by her, the precedent could well catch up in India where complex financial crimes are still under reported and under investigated.
