Sinlung /
23 May 2014

India’s Low-Hanging Economic Fruit is in the East – the Northeast

By Col (Retd) Anil Athale

It is good that the verdict of the 2014 general elections is clear and not a fractured one like in 1996 or 1998. The new BJP Prime Minister will find an economy that is on the slide, unemployment on the rise, and security threats worsening due to the emergence of a new cold war, among other things. On top of it all are the heightened expectations of a young and restless population.

But the first challenge before the new PM is to restore the power and prestige of the office of the Prime Minister. The erosion in the authority of this office that took place over the last 10 years is unprecedented – something not seen even during the tenures of Deve Gowda and IK Gujral, who ran shaky minority governments.

This erosion happened because the PM chose to play second fiddle to the UPA chairperson. As any administrator knows, power comes from the ability to reward or punish. In the case of the outgoing government, the power of rewards was in the hands of Sonia Gandhi, who controlled even minor appointments in the central government and its offshoots.

These appointees owed their personal loyalties to the ‘family’ and not the PM. Is it any wonder that the PM was unable to implement almost any policy? In the days of monarchy, the sceptre represented the power of the king. Even in its democratic ‘avatar’, the speaker of Parliament sits in the shadow of a ‘mace’, or sceptre.

The outgoing government was guilty of letting the sceptre fall into the hands of an unconstitutional authority, thus destroying the cohesion of the executive.

Politics, by its very nature, abhors a vacuum. The power vacuum in UPA-2 was filled by the judiciary, the media and some NGOs. It is easy to blame the judiciary for usurping the policy-making functions of the executive, but it saw the crown lying in the dirt and used the mechanism of the PIL to pick it up. The media, especially 24-hour television, and foreign- funded NGOs, were not far behind. A new PM will have to first wrest back the power of decision-making from these arms of the state and none-state actors. The battle is going to be hard and dirty, so much so that the new PM may find that the just concluded election campaign was a picnic compared to what lies ahead! The problem is that the institutions that acquired this power (the judiciary or the media) got it without corresponding responsibility. So they will fight tooth-and-nail to retain their power.

But while the new government fights these battles and begins to implement much-needed changes and economic reforms, there are three doable, non-controversial policy decisions that can easily yield double-digit economic growth. An economic institute has estimated that each one point rise in GDP propels six million families out of poverty.

The three non-economic measures suggested here are capable of minimally raising GDP growth by one percentage point each! The trinity of measures are:

* Focus economic and foreign policy on the east. The west can wait.
* Re-orient defence policy and reorganise the vast defence machine.
* Prioritise ‘soft power’ export as a major foreign exchange earner and employment generator.

Sanjaya Baru’s book, The Accidental Prime Minister: The making and unmaking of Manmohan Singh, has one intriguing revelation. It says that the outgoing PM’s initiative on open trade with south-east Asia was stalled by Sonia Gandhi and her National Advisory Council (NAC). As someone who has been studying the north-east insurgencies for the last 25 years (including the last few years as the Chhattrapati Shivaji Fellow of the USI), one can say without contradiction that trade with Asean via the land borders of the north-east will save millions of taxpayer rupees by reducing subsidies, generating employment and ushering peace that in turn will reduce defence expenditure.

The first obvious step in this Look East policy is to look at our own North-East first. For instance, the Kaladan river project to connect Sittawe port in Myanmar with Mizoram has been in limbo for the last 30 years! The border connectivity at Moreh in Manipur is primitive with only headloads permitted to be carried across the border! Contrast this with the fanfare and attention given to our trade with Pakistan via the Wagah border or via Uri and Chiken Di Bagh in Kashmir. At the risk of sounding harsh, one can say that Indian foreign policy in the last decade was reduced to a Pakistan policy. Unfortunately for us, the fundamentals of the Pakistani ideology are such that any progress will be a mirage for a few generations.

The ground situation in the Indian North-East is extremely favourable for ending the insurgencies and unrest once and for all. There is a great yearning to join the Indian mainstream and progress economically. A bold initiative in the North-East and the opening up of trade with ASEAN can work wonders for the region as well as the national economy. India’s defence posture is one of the most inefficient and resource wasting postures in the world. Fundamentally, the defence apparatus is still stuck in the British model of ‘Garrison army and expeditionary force ‘. Defence planning, currently left to the armed forces, has become a collection of worst-case-scenarios and their aggregation.

Modernisation has come to mean junior officers in the War Establishment directorate leafing through glossy defence magazines and forwarding demands for the import of the latest weapon systems! The scenario is completed with DRDO (Defence Research and Development Organisation) becoming a giant state within a state with import substitution passing for research and indigenisation of components masquerading as development. Illiterate durbaris in Delhi and many motivated Western commentators have expressed alarm at any hint of India’s review of its nuclear policy.

They forget that pre-emption, when an attack is imminent, is an integral part of any ‘no-first use’ policy. The new government can take its time in drawing up a comprehensive review of security policies. This should follow in three steps.

* Short-term (five years) and long term (20 years) comprehensive reviews of threats to India's security.
* Best mix of nuclear, conventional and sub-conventional forces to deal with them – both in terms of forces and equipment.
* Reform and renewal of the forces and production of weapons at most economical cost within the country.

Since the credibility of the threat of retaliation is a vital ingredient of deterrence (minimum or otherwise), the election of a strong-willed leader like Narendra Modi has already enhanced the credibility of our deterrence. It’s like adding 10 missiles to our arsenal. It is understood that military forces exist to achieve foreign policy goals (guns are the last argument of kings), including security.

In the Nehruvian era, he brilliantly turned it the other way round and used foreign policy to achieve strategic goals. But the 1962 debacle brought home the dangers of this approach. Such is the intellectual laziness of our foreign policy elite that any reference to building strength is ‘denounced’ routinely as an overly ‘muscular’ or provocative approach!

Should one then rather have anaemic policies? The ‘Ai mere watan ke logo’ lament on defeat needs to be banished to the dustbin of history. When next the army asks for new toys, the defence minister must ask some hard questions. Every time I have visited J&K (and that is several score times in the last few years) I am struck by the vast parks of vehicles and equipment parked in the open – and never used even once since 1971, or thousands of T-72 tanks, now being pensioned off and replaced by T-90s, that have never seen a shot fired.

A deep review of the existing defence posture is long overdue. It should be a ‘comprehensive’ exercise and not a truncated one like the Gen Rao committee (teeth-to-tail ratio), the Arun Singh expenditure committee or the Kargil review. These were truncated exercises and episodic and their recommendations were not implemented any way. A total revamp of security will not only yield savings worth 1 percent of GDP but also provide better security. Samuel Huntington (“The Clash of Civilisations”) had mentioned that India was the only country that seemed immune to American cultural power.

He mentioned that Bollywood outpaces Hollywood in the number of movies produced. The influence of Bollywood is all-pervasive in Asia. A fillip to dubbing, etc, will make it even more so. Giving industry status and making finance available will be of help. But even more importantly it is necessary to break the nexus between the underworld and the distribution of cultural products.

Buddhism is India’s greatest cultural export to the world. In the whole of South East Asia, there exists a vast reservoir of Indian cultural capital. To tap it and make India the favourite destination of the world’s Buddhists is not rocket science. If only the Bihar CM, instead of demanding a central package, had spruced up Bodh Gaya, he would be rolling in tourist dollars. All the three measures suggested are doable in the short term and will put India firmly on the path of economic recovery.

This would also silence the doubters about where Modi will find the resources for growth and jobs.

(The author is Coordinator of Inpad, a Pune-based thinktank)


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