Month: August 2018

For BIMSTEC to work, fix BBIN firs

Samir Saran

As Prime Minister Modi prepares to signal India’s leadership role in Kathmandu, an analysis of India’s role in the MVA process will prove instructive on the positive consequences of demonstrable Indian leadership and the costs of lost momentum.

बिम्सटेक, BIMSTEC, समीर सरन, बिम्सटेक 2018, BIMSTEC 2018, नरेंद्र मोदी, बीबीआईएन MVA, BBIN, MVA, एक्ट ईस्ट, कनेक्टिविटी, इंडिया, बांग्लादेश, Samir Saran, नेबरहुड फर्स्ट, प्रदर्शन प्रभाव, SAARC, सार्क, म्यांमार, भूटान, एमवीए, मोटर वाहन ऐग्रीमेंट
Source: Press Trust of India

Ahead of the BIMSTEC Summit in Nepal, New Delhi would do well to take stock of its integration and development initiatives around the sub-continent. The fact remains that BIMSTEC, along with other regional initiatives such as the South Asian Association for Regional Cooperation (SAARC) and the Bangladesh, China, India and Myanmar Economic Cooperation (BCIM-EC), has remained dysfunctional. Consequently, the intra-regional trade in South Asia has been abysmally low with Indian regional leadership being the principal collateral.

The only initiative with that appears to have shown some promise so far is the Bangladesh, Bhutan, India and Nepal (BBIN) initiative, which signed a historic Motor Vehicle Agreement (MVA) in 2015, signaling a resurgence of ‘sub-regions’ as key loci for regional integration. India has spent a fair amount of diplomatic and investment capital in enabling the MVA. At present intra-regional trade accounts for only five per cent of total trade, according to a World Bank study — a reminder of why individual countries in South Asia are turning to China as a reliable trade partner instead. On the other hand, this trade is likely to increase by 117 per cent from the current USD 23 billion if transport connectivity is strengthened and cross-border trade facilitation improved.

Indeed, the economic potential that is born from of integrating just three states, who are all a part of the BIMSTEC, should suggest the possibilities of a more articulate and expansive regional connectivity agenda. If India wants BIMSTEC to emerge as an important forum for regional integration, the success of the BBIN will go a long way towards displaying intent and capability. As Prime Minister Modi prepares to signal India’s leadership role in Kathmandu, an analysis of India’s role in the MVA process will prove instructive on the positive consequences of demonstrable Indian leadership and the costs of lost momentum.

First, India needs to demonstrate leadership in regional connectivity through consistent execution. The Prime Minister’s reset of relations with Nepal in May is crucial to understand India’s re-orientation of regional outreach at a time when Beijing’s Belt and Road Initiative is upending strategic equations across the continent. Nepal, vital to South Asian stability, stands to benefit the most from the BBIN and BIMSTEC connectivity projects. It secures access to its nearest ports and would be able to export Nepalese goods even beyond the region. The example of Nepal goes to show that if India can get the vehicles to move across borders, the reliance on Chinese built ports and infrastructure will reduce; and India can then replicate such initiatives with other BIMSTEC states such as Bangladesh, Myanmar and Thailand.


India needs to demonstrate leadership in regional connectivity through consistent execution.


It was unfortunate, then, that administrative hurdles from India’s bureaucracy have once again delayed the process. The protocol for passenger and cargo movement under the MVA were reviewed for the past two years, with the former being concluded at the last meeting in April 2018. Unfortunately, the Indian government decided to hold up finalising the passenger protocol until the cargo protocol is negotiated, which would take several further rounds of negotiations. While New Delhi’s reasons for doing so are unknown, the implications are clear — the agreement loses all forward momentum.

To add to the confusion, at about the same time the Indian government circulated a ‘letter of exchange’ to Nepal and Bangladesh to sign the three-country implementation of the MVA; and to Bhutan to counter-sign it. The signing of this additional agreement will go through another round of approvals. A further delay is not difficult to anticipate.

These delays are representative of India’s often messy regionalism. Just like the MVA, the cost of delaying the regional integration through the BIMSTEC is economically and politically high. The positives are equally great: BIMSTEC and the MVA allow New Delhi to tie up the loose ends of its ‘Act East’ and ‘Neighborhood First’ policy.

Which leads to the second point: if the BBIN is successfully executed, India has a replicable model to make BIMSTEC work. At present, BIMSTEC is in the doldrums, lacking sufficient commitment from Thailand, Sri Lanka and Bhutan. The ‘demonstration effect’ of well-functioning road connectivity between the three-nation BBIN bloc would catalyse the desired level of cooperation among the BIMSTEC countries. In a post-BRI world, reliance on Chinese-built ports and infrastructure will grow. For India, a way to preserve the arteries of sub-regionalism is essential, and BBIN represents a seed for that alternative. Building on the BBIN platform, India must be willing to commit significant financial, human and technical resources to strengthen BIMSTEC.


If the BBIN is successfully executed, India has a replicable model to make BIMSTEC work.


Third, the private sector needs to be represented more prominently in BIMSTEC. Perhaps the most glaring oversight of the BBIN was India’s failure to involve the private sector in its regional initiatives. The trial run along Kolkata-Dhaka-Agartala and Delhi-Kolkata-Dhaka routes alone, for example, reported cost savings of about 20 per cent alongside a substantial reduction in travel time. The benefits of BBIN connectivity then, would extend to the growth of micro, small and medium enterprises in all three nations, the building of regional value chains, and advancing innovation and entrepreneurship. New Delhi must realise that adequate representation from the private sector during negotiations would bring to the forefront those operational issues that are relevant to companies’ logistical need — which would make the MVA, and by extension connectivity initiatives under the BIMSTEC, truly transformational.

India must lead the integration process in South Asia if it is to retain its economic and political significance in the region. For this to happen, New Delhi must reassess its internal decision-making machinery and processes. The unnecessary delays in implementing the MVA were self-inflicted wounds — something Delhi must avoid as it prepares to take on a larger role in the BIMSTEC. Just like the BBIN MVA, the BIMSTEC is a strategic, economic and socio-political opportunity for India to recalibrate its imperfect relationship with the neighbouring countries. The Prime Minister’s Office must step in to re-energise Indian leadership on regional connectivity and deliver on one of the PM’s key ambitions.

The views expressed above belong to the author(s).

70 Policies: A treatise on the evolution of India’s political economy

Samir Saran

Focused primarily on the Indian economy, Gautam Chikermane’s new book, 70 Policies, also explores the impact of external influences — legal, political and administrative — on Indian policymaking. Following is the speech by ORF President during the launch of the book earlier this week.

Gautam Chikermane, 70 Policies, Indian policymaking, policies, India, Independence, economic debates, Samir Saran
Photolabs@ORF

Dr. Rajiv Kumar ji, Vice-Chairman of NITI Aayog, Sri Manish Tiwari ji, eminent lawyer and spokesperson of the Congress party, Sri Ashok Malik, Press Secretary to the President, Dr. Shamika Ravi, Mr. Sunjoy Joshi, friends, colleagues, ladies and gentlemen — on behalf of Observer Research Foundation, it is my honour and privilege to welcome you this evening.

We are here, of course, to celebrate the launch of my colleague Gautam Chikermane’s book, 70 Policies that Shaped India: 1947 to 2017, Independence to $2.5 Trillion. A very compelling chronicle of the life of India since its Independence. Let me congratulate Gautam for this publication that is both comprehensive and pithy. Writing, at its very best, is about communicating complex ideas in an accessible and comprehensible format. I believe that Gautam might have actually achieved this remarkably well with 70 Policies.

He has managed to distill some of India’s most contentious economic debates into a manuscript that can serve the needs of everyone — from government to industry to academia.

I would like to remind the audience that Gautam’s masterful work is only the latest addition to his long and illustrious career. Building on his multiple personas — as a journalist, editor, an economic pundit and author engaging with mythology and ethics, Gautam, with this, has established himself as a formidable scholar; his description of each of the 70 reforms in just 350 words deserves applause not only for his masterful prose, but also for his diligent research, reflected in the 683 citations that allow the reader to uncover the provenance of each of his interventions.

Read the book here.

Indeed, the book lets the reader decide if they’re happy with just a peek — or if they’d like to dive headfirst into the debates that have shaped India’s political economy. Only an individual with great clarity of thought could have made this possible.

Having said that, I cannot fail to point out that Gautam’s true love continues to remain the complexities and subtleties of India’s greatest epic: the Mahabharata. And I hope public policy will give him enough room to engage with that pursuit as well.

Gautam’s book provided me with some unique perspectives, three of which I would like to share by way of the introduction to the book:

First, the book very ably chronicles the evolution of India’s left of center economy policy making. It reveals to us that while the 1990s and the 2000s certainly saw a break from the orthodox central planning that bottlenecked our economy for the latter half the 20th century, India’s full embrace of the market remains hostage to the firm grip of our socialist ethos even today. Perhaps this is a reflection of who we are. Is this the New Delhi consensus?

Second, the book truly gives meaning to the words “past is prologue.” By gleaning insights from the errors of the past, it provides a clear guide for future generations of policy makers, entrepreneurs, business leaders and scholars to learn from. The book now serves as a permanent reminder that the unintended consequences of populist policy making can and will implicate India’s full potential as an economic power. A number of policies of the past remind of this.

And finally, it would be amiss to believe that the book servers merely as a chronical of our economic history. By exploring these 70 policies, whether it is the nationalisation of banks or the recently introduced GST, the reader gets a clear sense of the evolution of India’s political climate. Indeed, this book is as political as it is economic — and all its readers are better off for it. The political evolution is remarkably discernible.

Both Gautam and I hope that many of the vignettes captured in this book will continue to breed constructive introspection and help catalyze new ideas.

Of course, many of our ORF’s own initiatives will benefit immensely from a closer study of this book.

Gautam’s writing on the Jan Dhan Yojana and the Aadhaar initiative, for example, are relevant to our work of financial inclusion and the broader evolution of India’s digital economy. And his work on contemporary reforms such as the Insolvency and Bankruptcy Code and the GST will certainly inform our initiatives of India’s economic policy.

I am certain that scholars, research organisations and members of our government will similarly find that his book adds great value to their own efforts.

Ultimately, the book reminds us that while history does not repeat itself, it does rhyme. India’s once protectionist and isolationist stance is gradually giving way to a nation that is beginning to embrace the full potential of its economic growth and yet the shadows of our past create hesitancy in our progress.

It is my hope that everyone gathered here today will find learning from it as enjoyable as I have.

The views expressed above belong to the author(s).

As India turns 71, what is the rising global power’s vision for the world?

Samir Saran

India requires a “consensus” — a new proposition that will not only guide its own trajectory for the better part of the 21st century, but one that appeals to communities around the world.

 India, 15 August 1947, Indian Independence, liberal democracy, Sustainable Development Goals, business, civil society, industry, economic linkages, political differences, liberal international order, rising power, political boundaries, Samir Saran, British Empire, New Delhi, global economic power, Asia
Source: Press Trust of India

Seventy-one years ago — on 15 August 1947 — India gained independence. Over the subsequent decades, the country has managed its evolution in an international system largely created and guided by the United States and its partners. While it was not easy for India to pursue independent domestic and foreign policies within this system, the American-led order was preferable to the British Empire from which New Delhi had liberated itself.

 

Today, this global system is under serious threat. Washington, along with capital cities across the European Union, finds itself caught in a polarising debate on the social contracts of its society — questions of domestic inequality and identity have left the US and its allies incapable of effectively championing the values of the international order. Simultaneously, the balance of global economic power has once again tipped in favour of Asia.

 

Within this shifting global landscape, India has the opportunity to put in place a new framework for its own security, growth and development, and that of developing countries around the world. As a rising global power, this must be India’s principle endeavour in the coming decades.

The changing international order

The extraordinary rise of countries in Asia has spawned at least two new dynamics. First, political boundaries — many of them colonial legacies — are steadily becoming more porous through economic cooperation. Markets are converging across the Eurasian landmass as well as facilitating the geo-economic “union” of the Indian and Pacific oceans. This has resulted in new integrative dynamics; as cultures, markets and communities aspire for development and new opportunities. Second, even though territorial considerations acknowledge economic linkages, political differences are still being reasserted — not just to contest the consensus of the past, but to shape a new order altogether.

 

Asia is coming together economically but is also threatening to grow apart politically; market-driven growth in the region sits uneasily with a diverse array of political systems.

 

China is, in large part, responsible for both. While offering a political vision that stands in sharp contrast to the “liberal international order,” China has been equally assertive about advancing free trade, raising new development finance, and offering a new model for development and global governance. The prospect of China using its economic clout to advance its own norms is worrying for India.

A consensus to shape a new order

Given the velocity of change underway, the challenge for India on its Independence Day is to shape an inclusive and equitable international order by the centenary of its independence. To achieve this, India must prepare to act according to its capabilities: by mid-century it must build the necessary state capacity, industrial and economic heft and strategic culture that would befit its status as a leading power. The country could present this as a model for much of the developing world to emulate, and anchor faith in the liberalism and internationalism of the world order.

India, then, requires a “consensus” — a new proposition that will not only guide its own trajectory for the better part of the 21st century, but one that appeals to communities around the world.

 

What then are the tenets of a “New Delhi Consensus”?

First, India must sustain and strengthen its own trajectory of rapid economic growth, and show to the world that it is capable of realising its development goals within the rubric of liberal democracy. No argument for the New Delhi Consensus can be more powerful and alluring than the economic success of India. By IMF estimates, India already accounts for 15% of global growth. Even though nearly 40% of its population live in various shades of poverty and barely a third are connected to the internet, India is still able to proportionately shoulder the world’s economic burden. Imagine the possibilities for global growth if India can meet, and even exceed, the Sustainable Development Goals (SDGs).

 

States in the developing world yearn for replicable templates of growth, yet they find themselves with a binary choice between Western democracy, which is ill suited for deeply plural and socially stratified societies, and autocratic systems that have little room for individual freedom.

 

India, on the other hand has “emerged as a bridge between the many extremes of the world,” as former Prime Minister Manmohan Singh once remarked. India’s plural and composite culture, he said, was “living proof of the possibility of a confluence of civilisations.” The global 2030 development agenda, for the most part, may as well be a story of India’s domestic economic transformation and of its defence of diversity and democracy.

 

Second and flowing from the above, Delhi must claim leadership over the global development agenda. It is worth pointing out that India sits at the intersection of the world’s two most dynamics regions, Eurasia and the Indo-Pacific. The largest bulk of development finance will emerge from, and be invested in, these regions. It is incumbent on India to ensure that this is not a new means to maximise political interference, but a moment to offer unfettered opportunities.

In his recent address to the Ugandan Parliament, Prime Minister Narendra Modi affirmed that “India’s development partnership will be guided by [African] priorities” — a position that contrasts sharply with the West’s evangelical focus on governance reforms and China’s economic policies in the region. India’s recipient-led partnership framework will allow states to secure development pathways that are economically sustainable and politically acceptable. India now needs to articulate its intentions and the principles that will shape international development cooperation in the days ahead.

Third, Delhi must create and protect the space for equitable and inclusive global governance. For too long, leadership in the international system was considered a free pass to monopolise the global commons. India has always bucked this trend, emerging as a leading power that has never tempered its idealism of “having an interest in peace, and a tradition of friendliness to all,” as one official put it. Whether it is on free trade, climate change or international security, India’s non-interventionist and multilateral approach is well suited to support and sustain global governance in a multipolar world: the new reality of this century.

 

Finally, India must incubate a new social contract between its own state, industry and civil society. At the turn of the century, former Prime Minister Atal Bihari Vajpayee lamented that India’s democratic growth was held back by three failures: of the government to heed industry voices, of industry to appreciate the objectives of government, and of both in their commitment to the common individual.

Nearly two decades later, the imperative for India to correct these failures is even greater. The spread of information communication technologies and global supply chains implies that businesses and civil society must be made equal stakeholders if India is to develop its own unique consensus. Not only will this add greater legitimacy to India’s proposition, it will also create natural and grassroots champions for the country around the world.

 

For the first time since the end of the Second World War, a nation state that is wary of hegemonic tendencies and identifies itself with the equitable governance of the global commons is in a position to shape the international order. India is home to one-sixth of the global population and has sustained a unique democratic ethos and a foreign policy that is defined not only by national interest but also by solidarity with the developing world.

 

As a leading power, India must look beyond raw indexes of economic, political and military might, and craft a consensus that is consistent with its ancient and historic view of the world.


This article originally appeared on World Economic Forum.

The views expressed above belong to the author(s).