Sunday, May 24, 2015

Scripting a west side story: Modi’s visits to France, Germany and Canada adapt lessons learnt from China’s economic miracle

Being his own best publicist, Prime Minister Narendra Modi had indicated just what would be the tenor of his transatlantic tour in a tweet on March 26th: “My France, Germany & Canada visit is centred around supporting India’s economic agenda & creating jobs for our youth.”
In the age of Asia-Pacific, a focus on the Atlantic may appear a tad anachronistic. But Modi is, if anything, innovative when it comes to foreign policy. Note, a planned trip to the UK was postponed till after the May 2015 general elections there.
At an overall level the visits complete the set of tours to advanced democracies of the world – the US, Japan, Australia and now France, Germany and Canada. They address the Modi government’s approach to a constituency which is at the heart of modern finance and industry – though they could well be called post-industrial cultures today.
The goal is to showcase the Modi government’s sense of purpose and determination to drive a transformational agenda in the country, as well as to create a network of strategic allies which can be of use in dealing with India’s difficult neighbours, Pakistan and China.
Given the economic thrust, it was not surprising that meetings with CEOs, participation in industrial fairs, visits to industrial and skilling institutions featured prominently in the agenda. The companies of countries like France, Germany and Canada set standards around the world. Travelling to China last week this writer saw control equipment, spectrometers, assay machines, DNA profiling and genomic measurement equipment built in France and Germany dotting the labs of the high-tech industry zone in Xian, as well as the physical presence of small, medium and large European and North American companies so important for the Chinese economic miracle.
But there are other aspects to Modi’s transatlantic tour as well. First, the connect with the diaspora, especially the important one in Canada. It formed part of a pattern that has been visible in Modi visits to the US and Australia, more cautiously in Fiji, and more assertively in Mauritius and Sri Lanka.
Second, the visits should be seen in the context of the importance of summitry in modern international relations. Dealing directly with heads of government is a far quicker way of getting business done these days. So the quality time that Fran├žois Hollande, Angela Merkel and Stephen Harper made for Modi is important in an age when leaders meet each other frequently and you tend to get lost in the crowd in important multilateral summits if you don’t establish a modicum of personal chemistry through bilateral contact.
With the US president being given special authority to finish negotiating the Trans-Pacific Partnership (TPP), we are probably on the verge of a new world trading environment with negative implications for India. The US and Canada are part of TPP, whose finalisation will undoubtedly give an impetus to a parallel Transatlantic Trade and Investment Partnership (TTIP) between EU and the US. In such circumstances, we will need all the friends we can manage in pushing our trade and investment promotion agenda.
The third aspect relates to India’s strategic goals. France has a permanent membership in the UN Security Council and both French and German companies play a role in India’s defence industry. France has been a friend in need, disinclined to use embargoes to push its foreign policy goals.
There are also some common themes in the visits. One is that of energy and space technology cooperation. Both Canada and France are important nuclear technology players. Canada was the first to help India with pressurised heavy water reactors in the 1950s and 1960s and it can offer more by way of upgrading and modernising this technology. A new pact with Canada will lead to the supply of uranium for the Indian nuclear industry. Canada is a special case when it comes to energy, given its own innovative oil and gas industry which can help India diversify its sources of supply.
Vocational education and skilling are another aspect of what advanced countries can offer India. Our current education system is at a dead end and the Modi plan for making India a global manufacturing hub rests vitally on the creation of trained manpower that can drive the Make in India dream. Germany is a leader here, but both Canada and France have their own unique systems and experiences.
A new theme relates to security. Developed democracies are now facing the prospect of a new kind of terrorist threat from home-grown religious extremists. In an era where terrorists get radicalised by the internet and move effortlessly across borders, cooperation has to be both practical and efficacious. There is, as well, a great deal of expertise in countering cyber threats in all three countries. Recall, in 2009, Canadian researchers revealed the existence of the GhostNet run out of China – which had penetrated Tibetan government in exile as well as Indian government computers.
Modi’s visits resemble roadshows with their attendant hype, even though they also have a larger strategic purpose. But like all roadshows there is a time for publicity, and a time to get down to work on the MoUs, agreements, promises and commitments.
Times of India April 20, 2015

Pakistan in the eye of the storm

Last week, Pakistan’s parliament voted to remain neutral in the civil war in Yemen, angering Saudi Arabia and the Gulf Emirates. The decision came after five days of debates and is the best illustration you could have of the moderating influences of democracy over authoritarianism. You can be sure if the whole process had been confined to backroom deals between the Sheikhs and the Pakistan military or the Sharif brothers, Pakistan would have found it difficult to resist the pressure. But because the whole thing was out in the open, it became difficult to justify what almost all Pakistanis thought would be a bad decision.

The resolution is not binding, because Prime Minister Nawaz Sharif is supposed to have all authority over the armed forces. We know this is not quite true, but it does imply that it was not just the view of the Parliament that was key to the Pakistani decision. Of course, if somehow the Pakistan Army thought that by going to Yemen they could harm India, the decision to go would have been a foregone conclusion. When it comes to national interest, the one factor which always seems to trump Pakistani common sense is the perceived threat from India. Fortunately, in this instance, India was not an issue.
Pakistani defence minister Khwaja Muhammad Asif had revealed last week that the Saudis had wanted the works — Pakistani troops, warships and fighter jets to battle the allegedly Iran-backed Houthi rebels. A Pakistani refusal is bound to deeply anger the Saudis because the latter see themselves as mentors of the former and have helped Islamabad with dollops of money at various point in time. Further, the Saudis provided the Sharifs succour when they were being persecuted by Musharraf after he overthrew the government in 1999.
The 12-point resolution approved by Parliament said that Islamabad must maintain “neutrality” in the conflict, it also calls on the “warring factions” to resolve their differences through dialogue, it wanted the Pakistan government to take up the issue through the UN Security Council. And, most curiously, it thanked the People’s Republic of China for its assistance in the evacuation.
Pakistan has good reasons to have rejected what could have become a quagmire for its forces. Yemen is a vast under-developed region and prosecuting war there is no picnic, as the Egyptians learnt in the 1960s. More important is the fact that the Pakistan Army is fully committed to fighting its own civil war against a hardened enemy in the tribal areas of the north-west. It is also important to note that the war has the potential of becoming part of a larger Shia-Sunni conflict that is dividing the Islamic world in the Middle-East, and Islamabad is aware of the fact that not only does it border Shia Iran, but that some 20 per cent of its own population professes the Shia branch of Islam. Significantly, last Thursday, Iran’s Foreign Minister Javad Zarif was in Islamabad for meetings and he urged Prime Minister Sharif to avoid meddling in Yemen.
Iran is a powerful neighbour and has the capacity of making things difficult for Islamabad, considering that its other borders — with India and Afghanistan are not too peaceful. As it is, the province of Balochistan is in turmoil and Iran has the capacity of stirring up trouble there should Islamabad get out of line. Iran would not want anything to come in the way of a nuclear deal being negotiated with the US-led P 5+1, and neither — for their own reasons — would the Europeans and the Chinese.
Where does the release of Zakiur Rehman Lakhvi, the Lashkar-e-Taiba leader come in all this? We can’t be sure, but perhaps there is a connection. It could be a bone being thrown to the Sunni Islamists to prevent them from exercising their street power at this crucial juncture. As it is, the Ahle-Hadis LeT’s version of Islam is the closest to the version practiced in Saudi Arabia and this could well be some sort of a balancing act.
The reference to China in the parliament resolution is clearly aimed at telling the Saudis that Pakistan is not entirely without friends, especially since the United States has seen through its duplicitous ways and maintains an essentially transactional relationship. In October 2011, the then Prime Minister of Pakistan had described the relationship with Beijing as being “higher than mountains, deeper than oceans, stronger than steel and sweeter than honey.” But it has been abundantly evident that this love is one-sided.
The Chinese have their own interests in a stable Saudi peninsula. Half of all their crude imports come from the region and their ties with the countries of the region have been expanding in recent years. Further, its One Belt One Road initiative passes through the Red Sea. The Chinese are unlikely to underwrite any Pakistani adventurism in Afghanistan or in relation to India. Neither are they the kind of people who write out cheques at the drop of a hat. But at this juncture, Islamabad knows that beggars cannot be choosers.
Mid Day April 14, 2015
Last week, Pakistan’s parliament voted to remain neutral in the civil war in Yemen, angering Saudi Arabia and the Gulf Emirates. The decision came after five days of debates and is the best illustration you could have of the moderating influences of democracy over authoritarianism. You can be sure if the whole process had been confined to backroom deals between the Sheikhs and the Pakistan military or the Sharif brothers, Pakistan would have found it difficult to resist the pressure. But because the whole thing was out in the open, it became difficult to justify what almost all Pakistanis thought would be a bad decision. - See more at:

Pandits must be resettled in the Valley

Among the multi-layered tragedies that have afflicted J&K, perhaps the most poignant is the forced exile of the Kashmiri Pandit community. Estimates are that there are some 60,000 families, who now live mainly in Jammu and New Delhi. This could translate to 3-4 lakh people who were suddenly uprooted and forced to fend for themselves. 
In a Valley inhabited by some 70 lakh Muslims, it is hard to see how their resettlement would upset the ethnic balance. Yet those who are protesting make it out as though that would be the consequence of having the Pandits back in the Valley. 
An estimated 60,000 Kashmiri Pandit families were uprooted and forced to leave the Valley
An estimated 60,000 Kashmiri Pandit families were uprooted and forced to leave the Valley

The paranoia is manifested by claims that their return through “composite townships”, as mooted by the government, will be tantamount to Israeli settlement - but Pandits are as much entitled to live in the Valley as Muslims. 
The community had no choice but to leave. They were the objects of targeted assassination and intimidation at the onset of the Kashmir rebellion. People attacked Governor Jagmohan for their flight, but the reality is that the unarmed and scared Pandits fled as they witnessed mass intimidation and assassination of their community. 
All Jagmohan did was to ease their departure by assuring those who had government jobs that they would continue to get their salaries. 
The real blame for their departure rests squarely with the Jammu & Kashmir Liberation Front and its leader at the time, Yasin Malik. 
The violence in the Valley has receded. But the situation is not normal, as evidenced by recent incidents of attacks on security forces in Jammu, as well as the incident last week, where three unarmed police personnel were gunned down. 
Normality will not come till the union government addresses the sentiment that is exploited routinely by the Hurriyat. We must also settle with Pakistan, since Kashmir is a dispute in the books of the international community. 
But, of course, normality will also be judged by the return of the exiled Pandit community to the Valley. 
The problem now is that not many would want to go back to the Valley for economic reasons. Those who have government jobs can easily be reinserted into the system. But the others have moved on. After all, it has been a quarter of a century since they were exiled. They have been forced to join the mainstream in search of jobs and education and there may not be much left for them back home in the Vale of Kashmir. 
As it is, there is not much by way of manufacturing or services in the Vale. Yet the project of re-integrating the Pandits into the Valley has important cultural and political imperatives. Efforts have been made in the past to offer the Pandits incentives to move back. But barely 200 families have availed of the opportunities. 
The BJP is particularly keen to take up the project and as part of this, the Union Home Ministry has announced the decision to create “composite townships” and have requested coalition partner CM Mufti Mohammed Sayeed to acquire land for the purpose. 
This has been vehemently opposed by the separatists, led, ironically, by the same Yasin Malik who played a nefarious role in forcing the Pandits out. 
They have made all kinds of wild allegations about creating Israel-type settlements in the Valley. On the other hand, the Congress and National Conference charge that these townships will be akin to ghettoes. 
The word “composite” has been carefully chosen – Maulana Hussain Ahmed Madni, the founder of the Jamiat-ul-ulema-e-Hind believed India was a composite culture where Hindus and Muslims could live together and hence he and his organisation opposed partition. 
Chief Minister Mufti Sayeed has clarified that these will not be Pandit-only settlements, but include Muslims as well. Not many people realise that it was not just the Pandits who fled the Valley, but many Muslims as well. 
The key, of course, is just how the project will be executed. Pandits and Muslims have lived side-by-side in the past and even today they enjoy a composite culture under the rubric of “Kashmiriyat”. 
The idea of a composite culture has been battered by the events of the last 25 years, and what we are trying now is to see if its pieces can be put back together and a deprived people given a modicum of justice. 
The townships should not be seen as special fortresses, but a newer way of approaching the urbanisation of the Valley which requires not only proper housing, but generates job opportunities. 
As for security, there is no option but to make it part of the larger security of the Valley itself. As of now it is not all that bad, despite the isolated instances of terrorism. There are still some hardcore gunmen in the Valley, but their message is of little consequence. 
Besides composite townships, the government could also consider rebuilding the many run-down houses of Pandits in their erstwhile localities in Srinagar and other Kashmiri towns. While some properties were sold off, there are many lying more or less abandoned. The state can purchase and redevelop them. 
Reinserting the Pandits back into their old environment is a preferable option. However, at the end of the day, the process depends not only on the design of the project, but on the imperatives and desires of the individual Pandit families now living in exile. 
All options must be explored to do the right thing by them, because the state which failed to protect them owes them that. But at the end of the day, what they do, has to be their decision. 
Mail Today April 14, 2015

Friday, May 01, 2015

Power play over Iran

The news from Lausanne is confusing. But that is only to be expected in the complex endgame that is being played out between the P5+1 and Iran over the latter’s nuclear programme. We are at an inflexion point in the geopolitics of West Asia, if not the world. On one side we have the resilient Islamic Republic of Iran, an Arab world assailed by Sunni extremism. So important is the negotiation, that it has featured the US Secretary of State John Kerry and the foreign ministers of China, Russia, UK, France and Germany getting together to negotiate with the Iranian delegation led by Foreign Minister Javad Zarif.
On Saturday there were reports that the two sides were close to a deal after 18 months of tortuous negotiations, with Iran agreeing to reduce its centrifuge holdings and shipping its stocks of enriched uranium out of the country. However, on Sunday this was denied by the lead Iranian negotiator, Abbas Arachi who said there was no question of shipping stocks out of the country, though in his view, the deal remained “doable”.
Some brinksmanship is inevitable in a negotiation such as this, whose aim is to produce a framework agreement by Tuesday evening, and a final more detailed agreement by June this year. The agreement will be a phased one with Iran scaling back its nuclear programme, with a reciprocal phased lifting of sanctions. The deadlines have been moved twice before, but the Obama Administration does not want to move them further. Obama is aware of the pressure he faces from the hostile US Congress, which is determined to press for tougher sanctions by mid-April if the deal falls through.
The issue is the nature of the Iranian nuclear programme. For the past ten years or so, the US and other western countries have accused Tehran of making nuclear weapons. Iran had concealed a massive nuclear programme from the world and there are as yet unexplained aspects of the programme, though Iran denies that it is aiming to build nuclear weapons. So serious was the issue that the UN Security Council has passed a series of resolutions tightening the sanctions against Tehran. The negotiations now are about reaching an agreement which will ensure that the allegedly civil nuclear programme cannot easily break out and become a military one. The issue is not so much that Iran will abandon its pursuit of nuclear weapons, but of the warning time that would be available, were Iran to decide on a breakout. In exchange, the western countries will lift their crippling sanctions on the country. Given Iran’s record of prevarication in the past, the world needs a sound and verifiable deal.
It is no secret that there are powerful forces opposing the deal, in the main Israel which considers Iran as an existential threat and would be satisfied with nothing less than a complete dismantling of the Iranian programme. Backing Israel are powerful elements of the US Republican party, which recently invited Israeli Prime Minister Benjamin Netanyahu to address the US Congress over the head of the Obama Administration. On Sunday, even as rumours of a deal swirled in Lausanne, Netanyahu frantically dialled the US Senate Republican leader Mitch McConnell and expressed his concern over the agreement emerging. Neither the US nor Israel factor in Israel’s own nuclear capabilities in the equation. What the Republicans and Netanyahu have not done is to provide a practical alternative: All they want is an Iranian surrender.
The Iranian negotiations come at a particularly complicated conjuncture. On one hand, West Asia seems to be in the grip of a civil war pitting the Sunnis against the Shias. In Yemen, Shia Houthi rebels have overthrown the government headed by Ali Abdullah Saleh, an old American and Saudi ally resulting in a joint American-backed Arab intervention led by the Saudis. On the other hand, in Iraq, the US is providing air support to Iraqi and Iranian Shia militias to take on the Islamic State. There is turmoil across the Arab world which has featured the collapse of some states like Somalia, Libya, Syria and Iraq. In all this, Iran looks like an island of stability and while on one hand it is accused of backing the Hezbollah of Lebanon and Houthis of Yemen, it is also part of an informal American alliance fighting the Islamic State on behalf of Iraq.
US sanctions against Iran have been in place since 1979, but the more draconian UN sanctions since 2006-2010 have been more effective. As a result, Iran has not been able to modernise its oil industry or effectively exploit its natural gas resources. The negotiations also come at a time of falling oil prices, which makes Tehran more amenable for a deal.
With or without nuclear weapons, Iran is a major power in the Persian Gulf and both Israel and the US have, in the past, been allies of Tehran. If anything it is Washington’s cynical policies in the region that have driven Tehran to the nuclear path. The US backed Saddam Hussein’s wanton war against Iran, a conflict that left over 250,000 Iranian dead. Subsequently, the Americans went to war against Saddam, whose horrific consequences are still unfolding before us. Hopefully though, this time around, Washington will play a more responsible role than it has played in the region in the past.
Any failure of the negotiations arising out of unreasonable American demands will not quite take the situation back to square one. China and Russia have participated in the negotiations till now, but they are not bound to stick with the US and the Europeans, should the more hard-line Republican views prevail. If the P5+1 unity frays, we could end up with a whole new ball game in West Asia.
Mid Day March 31, 2015

China's rise is a worry for 'flat-footed' US

The decision of key American allies like the UK, Germany, France, South Korea and Australia to join the Chinese-led Asian Infrastructure Development Bank (AIIB) marks another step forward in the shaping of a Chinese-led Asian economic and, possibly, security order. It also underscores the missteps of the US in dealing with the consequences of the rise of China. 
The Obama Administration actively discouraged its allies from participating in the AIIB, in which countries like India are founder members. The US appears to be defensive in trying to preserve the American-led Bretton Woods system that dominated the world order since its creation in the wake of WW-II.
The AIIB, capitalised at $50billion, is no threat to either the Japan-led Asian Development Bank, or the US-led World Bank, which have higher assets. 
But the US has been tone-deaf in hearing the voice of the emerging countries call for some readjustment of the world financial order. 

The G-20 was recast by the 2008 financial crisis with a view of promoting coordination between the G-8 and the emerging economies, but while declarations have been many, there has been little action. 
The gridlocked US political system contributes to the US’ sticky footing. 
Flush with cash, China is seeking to internationalise its financial clout. In the past year it has helped create the BRICS bank (aka New Development Bank) and laid down $40billion for the One Belt One Road Silk Route initiative. 
This process should be welcomed, rather than be opposed. 
Right from the outset, the US assumed AIIB would not have transparent lending practices and it would be an instrument of Chinese foreign policy. 
President Barack Obama toured the Great Wall in China in 2009. The US has continuing frictions with China over cyber issues, as well as its territorial claims in the South China Sea, writes Manoj Joshi 
President Barack Obama toured the Great Wall in China in 2009. The US has continuing frictions with 
China over cyber issues, as well as its territorial claims in the South China Sea

Both charges may have some truth in them, but opposing it was not the best strategy. By joining the bank as founder-members, the various countries will have a say in its running and the ability to shape its behaviour. 
The problem with the US is that even though its economy is closely intertwined to the Chinese, it seems to be committed to a strategy of countering China through initiatives like the Trans Pacific Partnership which excludes China. 
The US has continuing frictions with China over cyber issues, as well as its territorial claims in the South China Sea. No matter how you look at it, American policy seems to suggest that its goal is to contain China. 
But there is another way of looking at the Asian giant. This is as a country which is desperately seeking to ensure that it does not become old before it becomes rich and whose foreign policy imperative is to ensure stability and prosperity of the country as a guarantor of the continuing rule of its Communist Party. 

It is to this end that the goal of the Party leadership is to shift its economy from an investment and labour intensive model, to one that emphasises innovation and entrepreneurship. Those who are looking at the “Make in India” plans of the Modi Government will be surprised to note that the workshop of the world—China, too, is raising the slogan for “Made in China 2025”. 
China’s prowess in manufacturing is well established. But equally, it is well known that China is often the integrator of goods made by others. The best example, perhaps, is the IPhone. Its chips and touch sensors are made in Taiwan, display panels in South Korea and Japan, Sony supplies front and rear cameras, TDK Japan provides inductor coils, Toshiba and Hynix of south Korea the storage, and the whole thing is assembled in China. The whole phone costs around $200-250 to make, of which the Chinese reputedly make just $6. 
Well, the Chinese are now focusing on moving up the manufacturing food chain. 
Earlier this month, during the annual meeting of China’s parliament, the National People’s Congress, Premier Li Keqiang unveiled the “Made in China 2025” policy along with an “Internet Plus” plan which will centre around innovation, smart technology, mobile internet, cloud computing, big data and the internet of things. 
In the meantime, China is undertaking reform of its state owned enterprises. Discussions are afoot to merge the two high-speed rail manufacturers, the China North Railway and the China South Railway. 
A reshuffle of top leaders at the country's two state-owned shipbuilders indicates the government is looking for a merger here as well. 
As ‘The Economist’ pointed out, the era of cheap Chinese labour has passed. In its time it was this cheap labour that gave a fillip to the notion of China being the factory of the world. 
But as we have seen, China was really the low-cost integrator, dependent on complex supply chains. But now, average Chinese wages are surpassing those of the ASEAN. 
Chinese manufacturing is also getting better at producing home-designed goods, an example being the Xiaomi smartphone. 
A lot of low-wage Chinese production is shifting to countries like Vietnam and Indonesia. In an important speech to the Boao Forum on Saturday, China’s president Xi Jinping struck an “Asia for Asians” line emphasising his government’s goal to use China’s economic might to shape a new Asian economic and security order. 
In the past few months we witnessed a shift in Chinese policy towards creating financial instruments to promote Asian integration. 
At the same time, the Chinese are also trying to reshape the security arrangements in the region. 
Last May, Xi had called for the Conference on Interaction and Confidence Building Measures in Asia (CICA) to come up with a new security architecture for Asia. 
Compared to China, the moves of the US appear flatfooted and confused. 
Mail Today March 30 2015

Thursday, April 23, 2015

Same Same But Different: Parliaments of India, China and Japan are all pushing reforms but guess who's ahead?

The buzzword across three principal Asian countries ­ India, China and Japan ­ is `reform'. It's clear that their impulses are interlinked and have consequences for the world. Coincidentally, all three have been having key annual sessions of their respective Parliaments whose proceedings provide us some markers as to their respective priorities.

Chinese Premier Li Keqiang's opening speech at the annual National People's Congress in early March laid out the agenda for transforming China into a middle-class nation, by creating an economy based on consumption and innovation, rather than merely investment and export.Arun Jaitley's budget is seeking to initiate his government's huge agenda in a modest and workmanlike fashion. As for Japan, the challenges are different ­ structural change is needed to give a second wind to an advanced economy trapped in multiple layers of regulation and red tape.
For both India and Japan, China is a benchmark of sorts. Growth of Chinese power has implications for them. Both have outstanding boundary disputes that periodically flare up. But equally important are their concerns relating to the economic and military rise of China.
India, whose economic size approximated that of China in the 1980s, may not be able to match China in this century, with attendant political and strategic consequences. Japan, which has had a troubled history with China, worries about the consequences of Chinese hegemony in East Asia.
What is striking is the clarity with which China is adjusting to what President Xi Jinping calls the `new normal' ­ economic growth slowing to 7.4% in 2014 and possibly 7% in 2015. Beijing has clearly understood that it needs to become an economy based on entrepreneurial skills and better off consumers. NPC is likely to follow the recommendation of the National Reform and Development Commission, China's Niti Aayog, which has proposed cutting down the number of restricted areas in investment from 79 to 35. Xi told a group of Shanghai parliamentarians on the sidelines of NPC that China will quicken the pace of creating free trade zones and make institutional innovation key to development. `Innovation' has become the new motto of the Chinese, whether it relates to economy or foreign policy.
In his remarks Li also noted that China has taken steps to cut red tape for private companies, permit online retail to expand.He promised that China will make it even easier to do business. Currently China is listed 90th among 189 nations in terms of ease of doing business; we are listed at 142.
China's strategic goal is among the first of Xi's four comprehensives: “To build an all-round well-off society by 2020“. Recall, in 2012, the key word was “moderately“ well-off society. The second is to comprehensively deepen reform, the third to create a society which works under the rule of law, and the fourth to “push for stricter governance“ of the Communist party itself. The last may sound innocuous, but anyone who has observed the Chinese anti-corrup tion campaign, knows that it means business, given the list of the high and mighty `Tigers' who have been brought low.
The test for China is tough enough, but the challenge for India is far tougher. Most Indians are desperate to see PM Modi's government succeed, if only because it is India's last chance at getting onto the high-growth track which can help eliminate poverty by 2030. But what is absent is a sense of self-confidence and clarity over the direction we are headed. As of now we have a slogan: Make in India. Yet it is not even clear as to what this means.
As for policies, government is still grappling with the problems of the past.Recently it passed an insurance reform bill pending since 2008; likewise an overdue mines bill has been passed as well, though the crucial land acquisition bill remains to be passed.
But equally important steps such as the need to cut through the thicket of regulatory regimes that plague India are not yet on the agenda. Whether it is universities, banks, airports, India is one of the most over-regulated countries in the world, a consequence of government's desire to retain the levers of power through regulators, who are almost always former civil servants.
There are no signs, as of now, that the Modi government has a plan to reform the administrative and regulatory system of the country, an important element in any `ease of business' strategy. It is one thing to say that India will enhance the ease of doing business in the country, quite another to clearly spell out the steps that will be taken and their timeline. As for eliminating corruption, that item seems to be absent from the current government's agenda, though it remains a real problem for the common man.
As for Japan, PM Shinzo Abe has promised “the most drastic reforms since the end of the Second World War“. But his efforts have been tangled in the politics of the country and its powerful lobbies ­ of doctors, farmers, bureaucrats and workers. In the current Diet session, he has slashed the powers of the agriculture lobby, but he still has a long road ahead. Two of his “three arrows“ of reform ­ higher government spending and massive monetary stimulus ­ have been blunted and the third, structural reform, remains in his quiver.
One reason for the energy that Beijing exhibits is that the consequences of failure there will be severe ­ probably the collapse of the Communist party rule. India and Japan only risk the possibility of sinking back into the torpor of low growth or deflation.
Times of India March 30, 2015