Hiccups in India’s new external engagement framework

Modi trade

 (Photo credit: Oneindia)


.Neo-liberal public intellectuals and foreign service babus in Lutyens Delhi are not happy with PM Modi’s “South Asia First” policy. For long, the managerial incentive was to hobnob with the “sahib log (people)” of the G 20. A predominantly rich country club, in which India is the poorest member. After all, our children do not aspire to study in Dacca or work in Kathmandu. Nor do we aspire to holiday in Pakistan. The incentive has always been to cozy up to the rich country missions in Delhi; get posted to rich countries abroad to enjoy the good life; drink the best wines; nibble the choicest of cheese and talk knowledgably of foie gras (duck liver paste).

First, Modi spoilt it for the domestic babus in Gandhi Nagar for thirteen long years, by making them spend their weekly holidays monitoring development schemes in remote villages of Gujarat, along with their ministers. Now, as PM, he seems bent on focusing the energies of the “foreign service babus” on our “near abroad”; an area that the top brass pointedly “looked beyond” for the last two decades. Now it’s all about roughing it out in “foreign” places in South Asia, which are in no way more “foreign” then the home districts of babus; rubbing shoulders with the “aam babus” of South Asia and making friends with movers and shakers in the region. All this is tough to adjust to.

Notice the immediate outcry that the PM should not neglect the West whilst seeking friends nearer home. What a sham!

India has courted the West for years, driven mostly by the “managerial incentives” of its babus and “babu-like politicians”. India forgot that the West, live all of us, is driven principally by commercial principles. Per these principles of engagement, if you are not strong at home and with your neighbours you matter very little abroad. Think Pakistan, if you want an example of a country which barely survives, on the twin and directly correlated pillars of US support and regional instability.

Look at the manner in which the “principled” G8 is now somersaulting to get an inroad into PM Modi’s mind space. The only thing that has changed between as late as March 2014 and today is that the people of India returned a mandate on May 16, 2014 which cocked a snook at the sham “principles” of the West.

Witness yet again the furor by our home grown neo-liberals cum faux- socialists over the horror of India speaking its mind at the WTO meet recently in Australia. It seems mindboggling that any Indian would question the need for food subsidies in a country, where nearly 70% of citizens earn less than $ 2 per day. The UPA was happy to coast along on vague assurances that the outdated, maximum subsidy limits on food, specified in the WTO, would not be applied to India till 2017.

Admittedly, by playing “spoiler” and rejecting the cozy compact submitted to by the UPA earlier, by “linking” it to a trade facilitation agreement, PM Modi was asserting his “56” chest” internationally, in a manner reminiscent of Putin. 

But it is note-worthy that PM Modi could have played the UPA tune of a short term of reference. After all, under the compromise reached by the UPA, India has till 2017 when food subsidies will not be hit. In 2017 Modi could plead international compulsions and reduce food subsides.

Domestic neo-liberals are at pains to explain that, in any case, the earlier UPA deal did not prohibit the government from giving a cash subsidy to the poor. It merely restricted the ability of the government to pay more than what it needs to farmers. Surjit Bhalla (Indian Express July 31, 2014) tabulates that the government has consistently paid much more than the equated international price for cereal purchase since the 1980s.  This is possibly true. But Bhalla forgets that the worst way to justify sound domestic policy is by pleading International constraints.

A case in point is the attempt to explain away high inflation since 2011 by ascribing it to the fiscal loosening post 2008. This type of reasoning is dishonest and misleading. It subscribes to the traditional manner of “reform by stealth and deception”, first used by the team of PM Narasimha Rao and Finance Minister Manmohan Singh in 1991 and continued during the successor UPA governments. It also has the downside of falsely creating the public perception that the world’s interests are different from those within the country.

Full marks to the Modi government for rejecting this craven strategy of economic reform and confronting the food subsidy issue boldly and in a transparent manner. It is noteworthy that subsequently, even the International Fund for Agricultural Development (IFAD); a UN entity, has rejected the notion that a country of 1200 million people should soft pedal its obligations to hungry people.

It is without doubt that agriculture subsidy needs to be better regulated and targeted. But the manner and sequence in which this is to be done, is a matter to be decided by Indian stakeholders- in this case the Union government and the State governments, by evolving a transition path for cost reflective, regulated fuel, electricity and  fertilizer prices whilst also rationalizing the administered price paid for the procurement of food.

Domestic neo-liberals need to step back from the 101 economics they base their arguments on and step into the real world of international negotiations. Sleight of hand; quid pro co (opening domestic markets for insurance and defence production) and swagger, all anchored to the foundation of rock-solid, domestic, political support, is usually what gets the “sahib log” in the West to the table. This is the China model and it works.

PM Modi knows this environment well. He is no stranger to the same environment at home, which an ordinary Indian battles daily to succeed. Fire in the belly, the capacity to take pain and personal credibility, is what succeeds in fiercely competitive environments, abroad and at home.

It is no surprise that our “domestic sahib log (DSL)” whether in heavily protected and regulated industries; the bureaucracy or our “public intellectuals” should question the shift in balance from the “far abroad” to the “near abroad” and be fearful of the bold contrarian stand in the WTO.  The DSL do not live in cheek-by-jowl community housing, where you are only as good as your neighbour’s opinion of you. Nor are the DSL used to perturbing the status quo. They are more comfortable in clubby environments; enhanced by the soft hum of convivial conversation and the gentle tinkling of cut glass. The DSL are far removed from the pressures of a competitive world and the science of living well with scarce resources.

Where the government failed spectacularly was in outreach and communication. The Indian people were bombarded with inspired public outreach of how terribly India had bungled. But the government was silent. Was this a result of crossed wires between the PM, Commerce and External Affairs? We will have to wait for a “kiss and tell” book from a retired babu or a vanquished politician, to get to the bottom of this mystery. But clearly, such outreach failures must not go unattended. Public perception is everything.



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