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India Emerging?

Sumit Ganguly and Rahul Mukherji

Sumit Ganguly is a Professor of Political Science at Indiana University, Bloomington, where he holds the Rabindranath Tagore Chair in Indian Cultures and Civilizations, and a Senior Fellow at the Foreign Policy Research Institute in Philadelphia. He can be reached at sganguly@indiana.edu.

Rahul Mukherji is an Associate Professor of South Asian Studies in the South Asian Studies Programme at the National University of Singapore. He can be reached at sasrm@nus.edu.sg.

This is one of six essays in the book review roundtable on Sumit Ganguly & Rahul Mukherji's India Since 1980.

We deeply appreciate the thoughtful and informed assessments of our book, India Since 1980. In a spirit of intellectual engagement, we seek to respond to some of the salient aspects of the commentaries on our work. To that end, we will expand on some of the issues that the various respondents have highlighted, question some of their claims, and address the possible avenues of further research that they have outlined.

At the outset we agree with C. Raja Mohan’s pertinent comment that “many traditional tendencies in India’s worldview seem to be re-emerging.” He correctly underscores the recent discussions that seek to resurrect the concept of nonalignment and the renewed emphasis on strategic autonomy. His assessment is certainly on the mark when he suggests that this attempt to resuscitate what is a moribund doctrine is clearly paradoxical at a time when India may be poised to assume a far greater standing in global affairs, a position that New Delhi has long sought.

That said, we feel compelled to quibble with at least two of Mohan’s key assertions. First, we believe that India’s economic transformation in the early 1990s cannot be separated from the Cold War’s end. In the absence of the Soviet collapse, along with its model of state-led development, India’s policymakers would have found it much harder to finally bid adieu to the state-led, autarchic model of economic development that had neither generated significant economic growth nor substantially reduced poverty. The two issues may be analytically separated, but as a practical matter, they took place in tandem. Second, contrary to Mohan’s claim, we do not agree that India’s decision to test nuclear weapons was “an assertion of Hindu nationalism.” As one of the two authors, Sumit Ganguly, has argued in his other scholarship, a combination of long-term threats from the People’s Republic of China (PRC), the emergence of Pakistan as a strategic surrogate for the PRC in South Asia in the late 1980s, and inexorable U.S. pressures on India to accede to the Comprehensive Test Ban Treaty (CTBT), among other matters, led to the Indian nuclear weapons tests of 1998. [1]

Like Mohan, Teresita Schaffer emphasizes the significance of India’s economic policies in the transformation of its foreign policy. We have, for the most part, little quarrel with Schaffer’s assessment of our work, with the exception of her parting comment that, “at multiple points in the book, there are references that would be obscure to anyone but an India hand.” We genuinely believe that we made every effort to avoid obscure references and have sought to make the book understandable to the curious but nonspecialist reader. In the absence of a specific example of such recondite references, we are at a loss to address this criticism.

We are grateful to Harsh Pant for his favorable discussion of the foreign policy section of our book. One issue that he focuses on deserves further comment. We agree that the “inability to think strategically remains India’s foreign policy’s major vulnerability.” However, we also believe that this lack of careful strategic analysis cannot be separated from the many infirmities and shortcomings of India’s institutional capacity. As early as 1981, in a rather vigorous (if somewhat overstated) critique of India’s foreign policy choices under Indira Gandhi, Shashi Tharoor, who is currently a Congress member of Parliament, trenchantly argued that India had paid dearly for an under-institutionalized foreign policy. His critique, which was especially relevant to the period that he had examined, continues to dog India’s foreign and security policymaking apparatus. The size of India’s foreign policy bureaucracy remains woefully inadequate, the training imparted to the entrants into the Indian Foreign Service remains antiquated, and knowledge of specialized subjects and regions continues to be extremely limited. Given these striking institutional drawbacks, it is indeed remarkable that India was actually able to make significant adjustments in its foreign and security policies at the Cold War’s end. However, without addressing these critical lacunae it remains unclear if the country can negotiate a pathway to the great-power status that New Delhi so ardently seeks.

As with Pant’s review, we find Jason Kirk’s analysis of our work to be heartening. He does, however, raise a compelling question about the book’s post-1980 focus, especially when it deals with the issue of the transformation of India’s foreign policy. He fairly notes that we had to adhere to a predetermined date, 1980, to conform to the expectations of the book series. This date did present us with a dilemma when dealing with the question of the transformation of India’s foreign policy. As most specialists would argue, the fundamental transformation of India’s foreign policy, the persistent tug of nonalignment notwithstanding, came about in the wake of the Soviet collapse and the Cold War’s end. Consequently, the revolution in India’s foreign policy clearly did not emerge in the aftermath of the Soviet invasion of Afghanistan. Nevertheless, as we emphasize in the relevant chapter, there is little or no question that the Soviet invasion constituted a dramatic exogenous shock to the region that forced India’s policymakers to slowly reconsider their abject dependence on the Soviets for their security. Indeed, after overcoming an initial frustration with the Reagan administration’s uncritical reliance on Muhammad Zia-ul-Haq’s military regime in Pakistan to prosecute a war in Soviet-occupied Afghanistan, India responded favorably to some delicate overtures from the United States. In turn, Indian foreign policy started ever so imperceptibly to walk away from its vicious, reflexive anti-Americanism and the accompanying vacuous rhetoric of third world solidarity. Old habits, embedded in a process of path dependence, however, died hard. Consequently, it was not until the end of the 1980s and the conclusion of the Cold War that the country’s foreign policy elite was forced to mostly unshackle their “mind-forged manacles”—to borrow a phrase from William Blake—and tentatively forge a new set of precepts to guide India’s foreign policy choices.

Finally, we thank Aseema Sinha for underlining an innovative research agenda that can be usefully teased out from our work. First and foremost, we reiterate that India’s economic transition offers valuable insights for the literature on transitions, which has a strong selection bias in favor of numerous accounts of authoritarian pathways. Authoritarian regimes, euphemistically called “hard states,” disciplined powerful social actors such as industrialists, organized labor, and farmers. In these states, acquiring land for industrialization was easy. Laws limiting job security were executed in the name of enhancing productivity. Shifting gears from providing incentives favoring import-substituting industrialists to supporting exporters occurred rapidly and with great ease.

We find India’s economic transformation to be in sharp contrast to many Asian transitions. Industrial deregulation in the 1980s favored the Indian business class but that did not engender globalization. Whereas China’s trade-to-GDP ratio rose between 1980 and 1990 (22% to 29%), the same figure remained constant for India (16%). Labor laws could not be rewritten in India. Even today, after nearly two decades of reform, it seems impossible to charge farmers for electricity in many Indian states. Exclusive industrial enclaves dubbed “special economic zones” had spurred growth in China. In India, on the other hand, similar enclaves were successfully resisted in states such as West Bengal, Maharashtra, Goa, and Punjab. In many critical areas of infrastructure, India also continues to lag behind. For example, Singapore and China have excellent ports, whereas India’s economic integration into the global economic order has occurred without a single world-class port.

It is easy, therefore, to conclude that India’s economy cannot be transformed. We argue otherwise. We find that economic ideas are important harbingers of change. When the dominant thinking supported import substitution, India could not be driven to promote exports, despite a serious balance-of-payments crisis in 1966. In 1991, by contrast, when the weight of technocratic ideas had moved considerably in the direction of export promotion and deregulation, India decided to jettison the old order. The 1980s were necessary for building a larger technocratic consensus, but the financial crisis of 1991 constituted the tipping point.

A tipping point model of economic change depends more on endogenous processes that undermine a system than exogenous shocks. Such an argument would suggest, for example, that a bridge collapsed not because of the last vehicle that crossed it but because of the manner in which its structure had been undermined over a long period of time. [2] These arguments are very different from a “punctuated equilibrium” model that relies on the role of external shocks. Likewise, India did not face its only severe financial crisis in 1991. Yet, this crisis had the greatest impact on policy change. [3] Prime Minister Narasimha Rao and then finance minister Manmohan Singh led a technocratic team that desired change because they believed that the strategy of import-substituting industrialization had failed to deliver expected results. They thereby utilized this crisis to engender significant policy changes.

The concept of a tipping point is a relatively underexplored idea in political economy, but it is an important dynamic for change in India and many other countries that are fraught with powerful oppositional forces. India’s telecommunications sector, for example, was transformed not in 1991 but after a substantial effort on the part of the prime minister’s office to prod the private sector. The New Telecom Policy of 1999 reflected a consensus within the prime minister’s office and the Ministry of Finance that a financial crisis in the telecommunications sector needed resolution. In their view, this could only be accomplished through a revitalized private sector.

We also agree with Sinha’s suggestion about the role of bottom-up change. Indeed this is one of the central premises of our chapter on political mobilization. Though India’s political system has remained unchanged since independence (barring a brief flirtation with authoritarian rule in the late 1970s), there is little question that Indian institutions have become more representative of the demographic features of the polity over time. To that end, we document how backward caste parties have increasingly come to the fore since the late 1960s. We also spell out the links between dramatic political mobilization and the growth of welfare programs in the chapter on economic transformation.

Finally, there is little question that developments at the global level have had significant impact on India’s domestic political and economic arrangements. Nevertheless, the Indian state has, contrary to much polemical commentary, managed to jealously guard its autonomy. For example, India’s response to the International Monetary Fund (IMF) during the balance-of-payments crisis in 1991 was nothing short of a sophisticated undertaking. Complex negotiations between India and the IMF produced one of the IMF’s most successful structural adjustment programs in the developing world. At other times, India has worked closely with the United States in the group of 20 (G-20) but not in the World Trade Organization or in climate change negotiations. Finally, we agree with Sinha that further research on the diffusion of global processes in countries that strive for policy autonomy is likely to generate rewarding scholarly insights.

Where will the four trends that we have identified take India as it negotiates a new century? Some of the trends are structural, but these structures are hardly immanent. Social structures are the products of human agency. Consequently, key choices on the part of the Indian political leadership can shape the evolution of these structures. For example, the social revolution that is underway has both positive and retrograde features. While it has made Indian democracy more representative, it has also generated a brand of populist politics and helped reinforce primordial group identities. Continued pandering to populism has already exacted a toll on the Indian exchequer. Unless this propensity is curbed, the prospects of continued economic growth could well be blighted as hard budget constraints are routinely flouted. In turn, long-term poverty alleviation could also suffer as a consequence.

Populism has also had adverse effects on India’s foreign policy. Parochial electoral concerns in particular states have acted as barriers to the pursuit of national interests and goals. Furthermore, faced with a turbulent global order, some within India’s attentive public have evinced a disturbing proclivity to fall back on the hoary slogans of yesteryear, notably nonalignment. Fortunately, others have expressed suitable doubts about the wisdom of any attempt to resurrect an atavistic ideological corpus. In sum, at this historical juncture India remains in flux. Since the future is hardly foreordained, the key debates underway about the scope of secularism, the pace of social change, the direction of economic policy, and the conduct of foreign relations will determine the country’s global standing.

ENDNOTES

[1] Sumit Ganguly, “India’s Pathway to Pokhran II: The Prospects and Sources of New Delhi’s Nuclear Weapons Program,” International Security 23, no. 4 (1999): 148–77.

[2] Rahul Mukherji, “Ideas, Interest and the Tipping Point: Economic Change in India,” Review of International Political Economy (forthcoming 2012).

[3] Stephen D. Krasner, “Approaches to the State: Alternative Conceptions and Historical Dynamics,” Comparative Politics 16, no. 2 (1984): 223–46.

Asia Policy 14 is supported in part by a grant from the Ford Foundation.