January 1, 2008


Is India an Ally? (Sadanand Dhume, January 2008, Commentary)

It was Indira Gandhi’s son and successor, Rajiv Gandhi, who in the late 1980’s took the first gingerly steps toward easing the government’s grip on the economy. But only after Rajiv’s own assassination did a new prime minister, P.V. Narasimha Rao, initiate real change. In 1991, faced with a balance-of-payments crisis, Rao appointed the Oxford-educated technocrat Manmohan Singh, the current prime minister, as his finance minister. Singh proceeded to scrap most licensing programs, reduce tariffs, and open the door to foreign investment. Almost as if on cue, growth rates, exports, and foreign-exchange reserves began to rise.

Economic growth, however, failed to rejuvenate the electoral fortunes of the Congress party, which during the 1990’s lost what had been a near-monopoly on both federal and provincial power. New regional and caste-based parties and, especially, a newly resurgent Hindu-nationalist movement spearheaded by the Bharatiya Janata Party (BJP) claimed vote share from the steadily shrinking Congress. Between 1996 and 2004, India was ruled by three non-Congress prime ministers, including the BJP’s Atal Behari Vajpayee (1998-2004), the only non-Congressman to serve a full term as prime minister.

Happily, this political turbulence has not stalled the economic dynamism set in motion by Singh. Between 1991 and 2006, per-capita income (in terms of purchasing-power parity) more than doubled from $1,400 to $3,800. The ranks of the middle class, broadly defined, have swelled to over 250 million people, by some measures the largest in the world. Today, more Indians buy cell phones each month than any other people.

The same story can be told on the corporate and macroeconomic level. Since liberalization, twelve Indian firms—spanning banking, pharmaceuticals, software, and services—have listed on the New York Stock Exchange, and three on the technology-heavy NASDAQ. Last year, Tata Steel, a leading private firm, finalized an $11.3-billion purchase of the Dutch steelmaker Corus. Overall, the economy expanded by a robust 9.4 percent in 2006, and foreign direct investment nearly tripled over the previous year to $16 billion. Foreign-exchange reserves stand at $230 billion.

Side by side with this opening-up of India’s economy have come changes in attitudes toward the West. Indians today are among the most pro-American people in Asia. A recent Pew Center survey of “global attitudes” found that about six in ten Indians hold a favorable view of the United States. Correspondingly, both official and people-to-people ties between the two countries have advanced, helped no doubt by the cultural bridge-building of the prosperous community of Indian Americans, now some 2.5-million strong. In a gesture of great symbolic importance, India vocally supported the U.S.-backed government of Hamid Karzai in Afghanistan, pledging $750 million in aid for the fledgling democracy and undertaking to erect its new parliament building. Recently, the American and Indian navies joined together with their Australian and Singapore counterparts for five days of exercises off the Malabar coast, the first such joint activity of its kind.

It is on such robust particulars that the geopolitical “case” for India has been built. Here, we are reminded, is a fellow democracy, the world’s largest, with an English-speaking elite and legal and political institutions shaped by nearly a century of experience as a British colony. Moreover, as a third-world country whose people are being lifted out of poverty without the heavy-handed aid of a benevolent dictatorship, India is living proof that democracy and the rule of law work, and its capitalist economy, free press, and cultural pluralism can serve as a beacon to other developing countries.

There is more. India’s longstanding feud with Pakistan, and its experience with outbreaks of Muslim violence at home, are said to have given it a special sensitivity to the problem of radical Islam, something that Western countries have only recently awakened to. Home to the world’s second-largest Muslim population, India offers an example to democracies struggling to integrate their own Muslims, and a rebuke to those who argue that democracy and Islam are incompatible. New Delhi’s participation will thus be a vital component in any sustained international effort to bring order to the Muslim world at large.

Finally, India shares America’s concerns about the rise of China, which sits on its northern and eastern borders, and with which it fought a short and sharp border war in 1962. India’s million-man army, the world’s fourth largest, and its blue-water navy make it a natural buffer as well as a sentinel on the trade route between East Asia and the Middle East. By the middle of the century, a demographically and economically vibrant India can serve as a counterweight not only to expanding Chinese influence in Southeast Asia but also to Beijing’s great-power ambitions in other places around the globe.

Thus the good news. But there is another side to the balance sheet, beginning with the realities of India’s economy. By the benchmark of its own past, India has indeed come a long way. But compared with the rest of the world it remains poor.

India isn't going to become a superpower for many of the same reasons that China isn't, but that reality has pretty little effect on whether they are an ally and an eminently useful one at that.

Posted by Orrin Judd at January 1, 2008 11:48 PM

Indians leaving socialism behind is a good thing for them. That is also increases our security is a nice side effect.

Posted by: erp at January 2, 2008 8:59 AM