India Today Holds Key To Its Own Future

India Today Holds Key To Its Own Future

“Because of the economic, national security, and global policy potential India presents, a rising India offers one of the most significant opportunities to advance American national interests over the next two decades,” in a report complied by Alyssa Ayres, Senior Fellow for India, Pakistan, and South Asia, Charles R. Kaye, Co-Chief Executive Officer, Warburg Pincus, and Joseph S. Nye Jr., of the Council On Foreign Relations, stated. “India today holds the key to its own future: if it can maintain its current growth rate, currently hovering around 7%, let alone attain sustained double digit growth, it will have the potential over the next 20 to 30 years to follow China on the path to becoming another ten trillion dollar economy.”

According to the authors, India is at a unique moment in which the right choices could make it a more significant contributor to global gross domestic product (GDP) growth in the decades ahead, and give it the wherewithal to become a stronger strategic partner to Washington. This new report identifies sustained high rates of growth as the most important factor for India’s global rise and calls on the U.S. government to more actively support the growth of the Indian economy.

The analysts are of the view that India’s economic growth created opportunities within India, for Indian citizens and Indian companies, and for American corporations and investors as well. In the process, India’s growth created new American constituents invested in India’s success. The U.S.-India Business Council, for example, grew from an anaemic 60-some members in the late 1990s to more than 200 by 2008, and around 330 today. U.S.-India bilateral trade has crossed $100 billion in goods and services—a five-fold increase from $19 billion in 2000. But to put it in a global context, that $100 billion is only around one-sixth of U.S.-China trade. This contrast, though potentially disheartening, points to the opportunity ahead.

“India has long been a country of tremendous promise, but it has not yet been able to translate that potential into the global power that its leaders—across parties—hope it will someday become,” they say. Recalling the economic reform, begun in 1991, they credit the growth of the Indian economy, which is now among the world’s ten largest, but it is only one-fifth the size of China’s. India has lifted more than 130 million people out of abject poverty over the past decade, but is still home to the world’s largest number of poor due to sheer scale. “India has become South Asia’s regional power, but has some distance to go before it can play a more ambitious role on the global stage.”

The authors of the report are of the view that deepening ties will necessitate placing a higher priority on transforming the prickly economic dialogue between Washington and New Delhi—just as the civil nuclear deal transformed strategic ties over the past decade. Washington will need to shift gears in the way it approaches trade and other economic matters with India.

They recommend that the United States should be much more ambitious in its trade and investment ties with India. India remains outside the major Asian trade initiative—the Trans-Pacific Partnership (TPP)—led by the United States. “Instead of waiting for India to meet a threshold determined by the United States, Washington and New Delhi should craft a roadmap together toward some larger trade commitment. That goal might be a free trade agreement or membership in a future expanded TPP; with a commitment to reach the goal at a future date, the roadmap should then specify steps both can take along the way.”

They suggest that the US offers active support for Indian membership in the Asia-Pacific Economic Cooperation forum, a nonbinding organization India seeks to join, would be a good start, as would discussions about sectoral agreements such as in services. And Washington possesses important technical expertise in matters that could be helpful to India’s reforms, like bank restructuring, infrastructure financing, or vocational skills training.

While expressing concerns about the ambivalence by India about opening its economy further, India risks being left behind by the strengthening networks of commerce growing up around it. “To that end, Indian politicians—in government as well as in opposition—should build domestic constituencies across parties for a more open, market-oriented approach, all geared toward helping the Indian economy grow,” they say. “A more open India will be able to draw upon the external resources needed to develop a larger manufacturing sector, create jobs, build infrastructure, and raise more people out of poverty—all top priorities for successive Indian governments, and central to the Modi agenda. In a world in which authoritarianism poses new threats to the interests of the United States and its allies, a stronger India—the world’s largest democracy—will be of even greater importance to U.S. interests.”

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