The Government has now admitted that the economy is in a bad shape. In the last Budget session, Prime Minister Modi promised to make India a $5 trillion economy by 2024. Noted economists argued that in order to get there the growth rate has to be 10 per cent. A few, like Dr. Subramaniam Swamy said if certain strong reform measures were soon adopted, it is possible to hit that growth rate and reach the target. On the contrary, to the shock and suffering of many, the economy went into a tailspin. It registered 5 per cent growth. The critics say the growth is even less as the informal sector accounting for bulk of the GDP is badly disrupted after demonetisation and GST etc. and the shoddy implementation of the latter. Be that as it may, how does the economy impact our foreign policy? That is our current concern.
Hans J. Morgenthau, a political thinker of the Realist School, had famously stated; “India cannot promote its laudable foreign policy principles because of its chronic poverty and widespread backwardness”. That was 40 years ago. Things have qualitatively and considerably changed for India. But not quite!
India has suffered from the mismatch between her economy and foreign policy objectives. For instance, for quite some time, India’s trade with European Union countries was higher than any other economy. About 60 per cent of trade deficit was also accounted for by the EU. Yet, India did not have a solid policy towards it. Secondly, as a French businessman, quite fond of India, remarked to me, “We all wanted to come to India, and make friendship but your economy was growing at 3 per cent, so-called Hindu rate of growth, as coined by late Prof. Raj Krishna. Now your economy is growing, the market is expanding, so, we are here.”
Third, a Professor at University of Hull, United Kingdom, said in a conversation, “See how China is using its economic might to push its foreign policy objectives.” India will have to do the same. It is the market that counts. One may not fully agree with Professor Paul K. Sutton, but surely, economy is one of the key determinants of foreign policy of a country.
The Nepalese Ambassador at a seminar in IDSA, Delhi had passionately explained that Nepal has roti-beti (food and marriage) relations with India. It has an umbilical chord which binds both the countries. In the same breath he confessed, we are reaching out to China to tap the pot of surplus money it has.” He was candid enough.
Ostensibly, Modi is straddling the world stage as a major world power. He has earned that epithet, collected a few international awards with his strong personality and charm offensive. Good for him and perhaps the country, as he is our Prime Minister. A few days ago, our former Ambassador in Paris, wrote that Modi had great meetings with Macron, Trump and Putin, around the G-7 meeting and the Eastern Economic Forum at Vladivostok.
Some keen observers of our foreign policy say that Modi is earning this warmth and accolades from the foreign leaders by heavily buying weapons from them; Rafael from France, Seahawk helicopters from USA, and S-400 missiles from Russia. They contend that he goes abroad with a shopping bag for arms and ammunitions. I, for one, would not grudge this, if it is necessary for our defense preparedness and national security. Although I have been arguing that we should heavily reduce our defence expenditure like Germany and Japan have done by stitching security partnerships with countries like the US. That is a question of another elaborate debate as the issues of sovereignty, multilateralism, etc came into play.
But, the moot point is, can Modi maintain his tempo as the world leader and India accomplish her big power aspirations with an economy growing at 5 per cent. We need to have double digit growth for at least 10 years, before we begin to occupy the world stage. Take for instance, Modi’s $1 billion offer to Russia. It sounds good, and completes the cycle of time, when India offers aid to a former super power and a benefactor. This money will be used to tap the energy and other mineral resources in eastern part of Russia.
Again the critics cry hoarse that Modi offered this money as a quid pro quo for Russia’s support on Kashmir. My position is, if India can tap the Russian resources and fend off Chinese incursion into Russian sphere. So be it.
The billion dollar question, can India afford it. The answer is NO. Modi’s high voltage derring-do foreign policy will not work unless it is backed by a robust economy, which is where he is missing the point. He has appointed a political greenhorn as his Finance Minister who is up to her eyes with the gigantic task of running the economy. I have written about bureaucrats running key ministries and dearth of political experience and so on. Modi has to think afresh on how he should place real political experience above bureaucratic inertia. Bureaucrats are managers, not entrepreneurs, cannot think out-of-the-box.
At any rate, this is for Modi to fix his government. He is smart enough to carry out course correction. But what we are concerned about is his fixing the economy. The hypothesis is, our national security and economic growth are dependent upon a successful foreign policy, and credible international image and active role are attainable only with a strong economy. Both are interdependent — foreign policy and economy. A mismatch will affect either.
To track back to the past, we have such parallel. George Santayana, the Spanish-American philosopher had said, “Those who do not learn from the past mistakes are condemned to repeat them.” So Modi be better advised to dig into the past. One is referring to Nehru’s fascination with world leadership. He formulated the concept of Non-Alignment with Egyptian leader Abdul Nasser and Yugoslavian President, Marshall Tito, maintaining equidistance from either of the superpowers of the time. He wanted to create a third bloc of third world countries and rub shoulders with other world leaders.
It was an ill-conceived strategy as the bloc was not viable as many of the countries had alliances with big powers. India too has a friendship treaty with Soviet Union, which was against the spirit of non-alignment. However, this stance of neutrality and non-alignment put a heavy cost on India for its security and development etc. At the same time, India’s economy did not take off without any economic alliances. The economy suffered from non-engagement.
Curiously, the present government’s stance is similar albeit in an opposite direction. Modi, unlike Nehru, is seeking multilateral engagements, wanting to play a world role by fraternising with many countries, Africa, Middle East, South-East Asia, Europe, and of course the QUAD – USA, Japan, Australia and India, or JAI – Japan, America and India. But the same question that stares us in our face, are we having the resources to support these engagements? India gives aid to Africa, Afghanistan, now to Russia, and many other countries. Good enough, but what about nearly 270 million people below the poverty in India, 45-year high unemployment and overall down-turn of the economy. This does not sound good or reassuring so fix the economy as we jump on the high-horse for the world stage.