Why is Delhi Faltering on Economic Reforms?

A broad ambivalence about economic reform prevails

He's not the real problem

My previous post dealt with the mounting criticism of New Delhi’s economic management.  Not too long ago, India was feted as the “New China” and a driving force in the BRICS fraternity.  It was the toast of the 2006 World Economic Forum in Davos, with “India Everywhere” logos emblazoned throughout the conference halls and a Bollywood extravaganza serving as the main social event.  But now gloom envelopes the country’s prospects.  Global investors have soured on the country and the flight of foreign capital is depressing the rupee’s value.   Jim O’Neill, the progenitor of the BRICS concept, has pronounced India to be the grouping’s most “disappointing” member and there is talk that Indonesia really deserves to represent the “I” in the acronym.

So what has brought about the reversal of fortune? Continue reading

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It’s Now Official: The Indian Government is Worthless

Criticism about New Delhi’s economic management reaches a crescendo

Although he claims to have been misquoted, Kaushik Basu, the chief economic adviser at the Indian finance ministry, has only confirmed what has been readily apparent for quite some time.  In Washington last week for the annual spring meeting of the International Monetary Fund and the World Bank, he told a think-tank audience that coalition politics has gummed up decision-making in New Delhi and that serious movement on much-needed economic reforms will have to wait until after parliamentary elections two years from now.  He added that the best that can be hoped for until then is a sprinkling of minor initiatives.

The comments set off a political furor and Kasu, a respected academic on leave from Cornell University, now asserts that Prime Minister Manmohan Singh’s government will soon move forward on the reform agenda in a big way.  Don’t bet on it.  His words may have been impolitic but they faithfully represent what is now a consensus view in India and far beyond. Continue reading

Bolstering the “Chinese Model” in South Asia

The United States should launch a Marshall Plan-like initiative to reinforce economic cooperation between India and Pakistan

A previous post highlighted how growing economic engagement is now the driver of the peace dialogue India and Pakistan launched a year ago.  The guiding principle is the so-called “Chinese model” – that is, the two countries pattern their ties along the lines of the India-China relationship, which combines broadening economic integration, frequent interactions between the national leaderships, and pragmatic diplomacy focused on incremental gains.

If enhanced trade ties were to take hold between South Asia’s largest economies, they would produce significant commercial and (eventually) security dividends for both countries and indeed the entire region.  So it’s worth considering what the United States, the most significant extra-regional actor in South Asia, can do to reinforce this effort, which if it bears fruit would have a very positive impact on U.S. security interests. Continue reading

Manmohan and Asif Do Lunch

The Singh-Zardari luncheon was more productive than many expected.  But the bonhomie will eventually run into stark political realities.

Although the timing was coincidental and neither man professes the Christian faith, it was appropriately symbolic that Indian Prime Minister Manmohan Singh and Pakistani President Asif Ali Zardari broke bread in New Delhi on Easter Sunday.  After all, both are responsible for the resurrection of bilateral affairs from the deep chill that followed the 2008 terrorist strikes in Mumbai.  As a New York Times editorial today notes, “both deserve credit for their sensible, workmanlike effort over the past year to improve relations between the two nuclear rivals.”

Their luncheon, billed as an informal get-together but which had all the trappings of a mini-summit, was the first trip to India by a Pakistani head of state in seven years.  It not only gave further momentum to the peace dialogue the two countries launched a year ago, which has already resulted in growing trade links.  But it also imparted new optimism that the talks could move on to such contentious matters like the perennially-inflamed dispute over the Kashmir region. Continue reading

Bountiful Questions

The curious timing of the bounty on Hafiz Saeed raises the issue of whether U.S. policies toward New Delhi and Islamabad are in sync.

If anything, the $10 million bounty the Obama administration offered last week for information leading to the capture and arrest of Hafiz Muhammed Saeed, a high-profile jihadi leader in Pakistan, is long overdue.  Still, the announcement’s particular timing is curious.

Saeed is a founder of the Lashkar-e-Taiba (LeT, or “Army of the Pious”), one of the world’s largest Islamist terrorist groups, which was originally formed to wreck havoc in India but has now developed global capabilities.  He is widely considered to have masterminded the horrific November 2008 attacks in Mumbai that killed over 160 civilians, including six Americans.  He has close personal ties with Osama bin Laden that stretch back to the 1980s and LeT has a long history of institutional links with al Qaeda. Continue reading

Islamabad Looking for Love but Bereft of Suitors

Pakistan’s embarrassing rhetoric towards Beijing is a sign of strategic desperation

The playing off of two stronger patrons by a smaller or weaker country is a time-honored tactic in international politics.  So it is no surprise that Pakistan seeks to create geopolitical leverage by nuzzling up to China whenever a downdraft occurs in its relations with the United States.  But Islamabad’s current approach to Beijing is striking on two counts.

The first is the profusion of fulsome, even embarrassing, metaphors that Pakistan issues in an attempt to inveigle China.   The second is how ineffective the sweet talking has been in enticing Beijing to attach itself ever closer to the Islamic Republic, or in spurring Washington into fits of jealousy. Continue reading