"India Will Be the
World's Next Great Power."
Not so fast. The dramatic opening of
India's hidebound economy, substantial improvements in India-U.S. relations, and
rapid, sustained economic growth for well over a decade have led most analysts
and policymakers to conclude that India will easily emerge as one of the world's
great powers in the 21st century. In 2010 while visiting India, U.S. President Barack Obama said, "India is not just a rising power; India has already
risen." And just a few weeks ago, Defense Secretary Leon Panetta
called India a "linchpin" in the U.S. "pivot" to Asia,
while Secretary of State Hillary Clinton described the U.S.-India tie as a
"critical bilateral relationship."
Certainly, there has
been reason for such optimism. Until the recent global economic downturn, the
Indian economy was the second-fastest-growing in the world, reaching a rate of 9.8
percent in October 2009. Poverty dropped 5 percentage points between 2004 and 2009, according to the widely accepted Indian National Sample
Survey. Meanwhile, Indian firms have been going global. In 2006, Indian steel
magnate Lakshmi Mittal purchased the French company Arcelor, creating the world's
largest mining and steel firm. In 2008, the Indian conglomerate Tata purchased
the iconic British Jaguar and Land Rover brands from Ford. And, despite some uncertainty now hovering over
India's investment climate, key global firms continue to bet on India. In late
June, Coca-Cola, which had left India in the early 1970s, decided
to invest $5 billion by 2020. Similarly, Swedish furniture retailer Ikea announced
that it would invest almost $2 billion in the next few years.
On foreign policy, India
has shown growing global aspirations -- and capabilities. It is the
fifth-largest player in the reconstruction of war-ravaged Afghanistan, and its
reach extends well beyond its neighborhood. At the recent G-20 summit in Los
Cabos, Mexico, Prime Minister Manmohan Singh pledged $20 billion to an
endowment designed to shore up the IMF's lending
fascination with India's growing economic clout and foreign-policy overtures
has glossed over its institutional limits, the many quirks of its political
culture, and the significant economic and social challenges it faces. To cite
but one example, at least 30
percent of Indian agricultural produce spoils because the country has
failed to develop a viable supply chain. Foreign investors could alleviate, if
not solve, that problem. But thanks to the intransigence of a small number of
political parties and organized interest groups, India has refused to open its
markets to outsiders. Until India can meet basic challenges like this, its
greatness will remain a matter of rhetoric, not fact.
Growth Is Inevitable."
No. When India began to
liberalize its economy after the 1991 financial crisis, many analysts concluded that the country was on a glide path
to growth. The sheer size of India's market, its wealth of entrepreneurial
talent, and its functioning legal
system all seemed to herald economic success.
Sadly, these sunny
assessments overlooked key hurdles. Many Indian politicians remained wedded to
an anachronistic model of state-led growth. Powerful groups with vested
interests in the existing economic order -- from well-subsidized farmers to
well-entrenched industrial labor unions -- opposed reform. And the rise of
coalition politics, with all their uncertainties, threatened coherent government
action. These factors have now come together to create a perfect storm for
In the last quarter,
India's economy grew at a mere 5.3 percent -- its worst performance in nearly a
decade. In April, industrial growth was a paltry 0.1 percent. Many
Indian policymakers are attributing
this downturn to the European fiscal crisis and the global economic slowdown.
But the real problems confronting the Indian economy are indigenous.
Indian politicians of
all ideologies have supported unsustainable spending in an effort to placate
the country's increasingly politically mobilized population. Farmers in
significant parts of India pay little or nothing for electricity, but officials
refuse to challenge their subsidies. Politicians fret about raising gasoline
prices for fear that the middle class will revolt. And to avoid student
unrest, they have allowed the university system to reach a breaking point,
because the fee structure cannot meet even a fraction of operating costs. The
result of all this pandering has
been a fiscal deficit of about 6 percent of GDP.
India's leadership has
also failed to reform the country's behemoth public sector. For example, the
state-owned Air India requires routine infusions of cash, but the government
refuses to privatize the company lest it anger organized labor. On the flip
side, entrepreneurs are hobbled by antiquated legal regimes and idiosyncratic
rule-making. Outdated land-acquisition laws have stopped a range of industrial
projects, and quirky policy shifts have undermined growing fields like
What's more, some
analysts are now arguing
that the absence of transparent regulatory and legal frameworks has opened new
vistas of corruption. Indeed, the lack of a clearly defined legal regime led to
an ad hoc auction of the 2G spectrum in 2008. The flawed auction may have cost the treasury as much as $40
billion, according to an independent government
watchdog. A new
scandal is brewing which suggests that in 2004 state-owned coal seams were
sold at well-below-market prices. Unsurprisingly, the specter of legal
uncertainty combined with rampant corruption has had a chilling effect on
foreign investment. All this makes India's future growth seem far from
"India Can Help Contain China."
Hardly. Because of its
longstanding disputes with Beijing, U.S. policymakers have hoped that New
Delhi would join Washington in balancing against China. But though India has
had significant quarrels with China, it remains extremely skeptical of the U.S.
"pivot" to Asia and of playing any part in an American strategy of containment.
Many Indian elites fear that joining the U.S. effort would simply provoke
China's wrath, and their obsessive concern with policy independence, deeply
rooted in India's political culture of nonalignment, reinforces the
unwillingness to make common cause with the United States.
But it was India's
reluctance to throw in its lot with the West that left it virtually defenseless
when China attacked in 1962. A border dispute had erupted several years earlier
over Chinese claims on what India deemed to be its territory. Nevertheless,
Prime Minister Jawaharlal Nehru had limited defense spending because he
believed it would divert critical resources from economic development and belie
his staunch commitment to nonalignment. When the battle-hardened People's
Liberation Army attacked, the Indian military was grossly unprepared. Soldiers
without appropriate clothing, weapons, or training were rushed to the front,
and large numbers died from frostbite and high-altitude ailments before
they even had a chance to fight. The border dispute has never been resolved. In
fact, over the past couple of years, China has actually expanded its territorial
claims to include the entire Indian northeastern state of Arunachal Pradesh.
extend into a number of other arenas as well. Beijing categorically refuses to
accept the legitimacy of India's nuclear weapons program (which was begun in
response to China's), and it tried to scuttle the 2008 U.S.-India civilian nuclear
agreement. Furthermore, beyond its longstanding alliance with
Pakistan, China is now developing relationships with the smaller South Asian
countries and subtly encouraging anti-Indian sentiment in them. For example, as
India has failed to resolve a series of ongoing differences with Bangladesh, China
stepped in to improve Bangladesh's infrastructure.
Globally, China and
India have begun to compete for long-term oil and natural gas contracts -- and
India has been losing. Several years ago, the Angolan government rescinded an
agreement with India to develop some offshore oil blocks after China offered it
a $200 million line of credit. More recently, China sternly
warned the overseas arm of India's Oil and Natural Gas Corp. against prospecting for hydrocarbons off
the coast of Vietnam. None of these tensions is likely to abate anytime soon,
especially because India remains acutely dependent on external energy sources.
significant conflicts, Indian officials have resisted a closer partnership with
the United States. In addition to concerns about losing their freedom of
action, Indian policymakers fear that U.S. policy will change with every
election. The United States may be pivoting to Asia now, but if it changes its
mind in the future and tries to accommodate Beijing, it will leave India in the
lurch, subject to Chinese intimidation. So, for now, India is hedging its bets.
"Tensions With Pakistan Have Eased."
Not really. In recent months, there
has been a minor thaw in India-Pakistan relations, but the two countries remain
far apart on the critical question that has bedeviled their relations since
independence: the disputed status of the state of Jammu and Kashmir. That
rivalry will only intensify as the United States and the NATO-led International Security
Assistance Force withdraw from Afghanistan. The Pakistani military
establishment's obsession with "strategic depth" against India has not abated,
nor has its commitment to install a pliant regime in Afghanistan post-2014.
India's political leadership, which has made significant economic, strategic,
and diplomatic investments in Afghanistan, is equally unlikely to cede ground
for fear that a neo-Taliban regime will emerge.
are likely to cool markedly in the near future. And a return to the periodic
crises that dogged India-Pakistan relations in the 1980s and 1990s will be
distracting and expensive. India's military mobilization against Pakistan in
the wake of the December 2001 terrorist attack on the Indian Parliament cost
the country approximately $1 billion. Until tensions abate, India will have to
remain vigilant along its western border, increase its military spending, and
focus its diplomatic energies on keeping the peace. It will remain tied to its
neighbor, and its aspirations to transcend regional politics will remain
Will Be a Good Global Citizen."
Perhaps. Some scholars argue that
states are more likely to accept global standards of behavior as they become
more powerful and gain a stake in world affairs. The evidence, however, is
distinctly mixed, and India is likely to march to the beat of its own drummer.
In some arenas it will play a helpful role; in others it will remain as
recalcitrant as ever.
For example, it will be
reasonably forthcoming on nonproliferation issues now that it is, for all
practical purposes, a nuclear weapons state. If China and Pakistan are willing
to accept limits on production of plutonium and highly enriched uranium, India
might well support a Fissile
Material Cutoff Treaty. By contrast, it would be foolish to count on India in
global climate change discussions. India's policymakers assert,
with some justification, that the advanced industrial world is responsible for
the bulk of anthropogenic climate change. Simultaneously, they contend that
India can't afford to subordinate economic growth to carbon reduction. As then-Environment Minister Jairam Ramesh, said in 2009,
"In the United States and the developed world, emissions are lifestyle emissions. For [India], emissions are
developmental emissions." Furthermore, India argues that its per capita
emissions will remain well below those of advanced industrialized states for
decades to come. That argument may
well be flawed, but it has a lot of political traction in India.
Nor will India yield
much ground on global trade negotiations unless its concerns about agricultural
subsidies in the advanced industrial world and trade in services industries are
met. Given its size, India wields
much clout in this arena, and Indian negotiators can be unyielding. Even if
India achieves the international status it seeks, it may not always act in
concert with Western powers.
"India Will Have Serious Power Projection Capability."
Not quite. There is little question
that India is dramatically expanding its naval reach and
airlift capabilities. And contrary to popular belief, these expansive plans
are not a significant financial burden because, according to recent World Bank
estimates, India's military expenditures are less than 3 percent of its GDP. Even
with slower economic growth over the next few years, India should be able to
arm itself more than adequately.
The problem, however,
lies in its cumbrous, slothful, and, until recently, corruption-ridden weapons acquisitions process.
Ironically, the effort to clean up this process has resulted in complex bureaucratic
and legal procedures, further slowing what was already a glacial pace. For
example, the decision to replace India's aging fighters with a new multirole
combat aircraft has been ongoing for the better part of a decade, even though the new plane has already been chosen.
The extraordinary complexity and sluggishness of the process do not bode well
for India's ability to swiftly acquire and deploy the military capabilities it
will need if it hopes to project power throughout the region.
Nor have indigenous
efforts to build up military capabilities been successful. For example, faced
with the increasing obsolescence of its MiG-21 fleet, India finally began work
on a light combat aircraft in 1990 after much deliberation. The first prototype
flew in 2001, but it was 10 years before the initial steps to raise a single
squadron for the Indian Air Force finally went into effect. What's more, the
aircraft's engine is American, its radar systems were built with Israeli
assistance, and some of its munitions are of Russian origin. If India really
wants to be a regional military power, it will have to either strengthen its
indigenous efforts or radically streamline its foreign military acquisitions
Unfortunately, no. After the defeat of the Bharatiya
Janata Party (BJP) in 2004, many secular Indian intellectuals celebrated. They
genuinely believed that the dark shadow of ethnic nationalism was receding and
that the country could renew its civic and plural traditions. Such optimism, while
understandable, was premature.
The Hindu right, which
was ascendant in the 1990s, is now rudderless and leaderless. But it has yet to
abandon its supremacist ideology,
its membership is holding steady, and some within the Hindu-chauvinist BJP see
Narendra Modi, a highly
divisive figure known for his anti-Muslim sentiments, as a potential prime
minister. India's electorate might well find him too contentious, but the mere
fact that his party sees him as a possible contender for the country's highest
elected post suggests that his pernicious ideology is alive and well.
What's more, small
numbers of Muslims have also become increasingly radicalized -- by the
intransigence of the Hindu right and the siren call of Islamism from the Middle
East. Some of these radicals have links to global and Pakistan-based Islamist
organizations, and some have even been connected to acts of violence on Indian
soil. Unfortunately, beyond sounding the tocsin about the dangers of domestic
militancy, India's policymakers have not taken serious steps to stem its rise.
Their inaction in the face of this very real danger, in turn, feeds the BJP's
charge that the secular political parties in India are guilty of pandering to
Obviously, the long-term
consequences of this kind of religious and ethnic conflict could be extremely
toxic. Continued and persistent outbreaks of Hindu-Muslim violence will have a
chilling effect on foreign investment, they will sap the energies of India's
political leadership, and they will damage India's global image as a secular,
Can Be America's Most Useful Ally."
Probably not. Both U.S. President
Bill Clinton and Indian Prime Minister Atal Bihari Vajpayee claimed that India
and the United States were "natural allies." For Clinton, this characterization
was a deft tactic to paper over important differences. He recognized India's status anxiety and saw that friendly
rhetoric might yield quick dividends. Vajpayee's use of the term was equally
instrumental. From his standpoint, aligning with the United States could help isolate
Pakistan. And there were genuine reasons for cooperation: common democratic
values, a shared fight against Islamist terrorism, and common concern about Chinese
However, a significant
segment of the Indian public insists that the country retain full independence
in foreign affairs, and India's policymakers rarely lose an opportunity to
underscore this concern. As Prime Minister Singh said in a major address to
India's armed forces, "We must therefore consolidate our own strategic autonomy and
independence of thought and action." That
attitude is a significant barrier to cooperation. Consequently, despite a
convergence of interests, it may prove exceedingly difficult to forge an
institutional partnership with the United States.
Given the values and
concerns it shares with the United States, India's resistance to closer
collaboration is bizarre. After all, during a significant part of the Cold War,
despite profound ideological differences and a professed commitment to
nonalignment, India was for all practical purposes a Soviet ally -- a
relationship codified in the Indo-Soviet Treaty of Peace, Friendship, and
Cooperation. But, today, two decades after the Cold War's end, Indian elites
have again inexplicably taken refuge in the idea of nonalignment, under the
guise of "strategic autonomy." In considerable part, the intellectual
establishment's lack of imagination stems from its paucity of trained
international affairs specialists. Shocking though it may seem, in a country of
over a billion people, perhaps only a dozen or so political analysts are of
truly global stature.
Other factors are also
likely to constrain partnership with the United States. India's political order
has become increasingly federalized, and despite the existence of at least two
national parties, it is unlikely that either will be able to form a
national government of its own in the foreseeable future. That means India's
ruling party will be forced to pursue a compromise foreign policy. Thanks to
the exigencies of coalition politics, for example, the United Progressive
Alliance government in New Delhi has been forced
to shelve a decision to allow
investment from foreign multibrand retail stores like Wal-Mart. Similarly, a
carefully negotiated water-sharing agreement with Bangladesh also fell prey to
the demands of a fractious coalition partner.
Finally, the United States
cannot paper over some fundamental differences of interest. The two countries remain at odds over how best to deal with Iran's apparent quest for
nuclear weapons. Even though most Indian policymakers view Iran's nuclear
pursuit with concern, they will not endorse unilateral military action against
the country. India remains dependent on Iranian oil and natural gas, it has a
substantial Shiite population, and, above all, it is
extremely uncomfortable with the unilateral exercise of U.S. military power
against recalcitrant regimes.
In fact, India becomes
particularly concerned when regimes are forcibly ousted because of their human
rights records, as in NATO's action against Libya. In considerable part, this
fear stems from India's own domestic infirmities and its uneven record in
suppressing domestic insurgencies. Admittedly, the notion that any country
would militarily target India over its human rights record seems far-fetched,
but the concern nevertheless animates Indian thinking about the subject.
Undoubtedly, the India
of today is a far cry from the poverty-stricken, militarily weak, socially
fractured, and diplomatically isolated country of the Cold War. Nevertheless,
unless its leadership can tackle problems from corruption to bureaucratic
stagnation to political dysfunction, its hope for global standing in the 21st century will remain just a hope.
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